Analysis
The appeal concerned Nettlebed School in Oxfordshire. In 1914 and 1928, Mr Robert Fleming conveyed land to Oxfordshire County Council (the council) under the School Sites Act 1841 (SSA 1841). The benefactions enabled a new school building to be built. The school operated on the site until 2006. In the 1990s, the council decided to relocate the school to a new building with improved facilities on other land owned by the council (adjacent to the old site), and the pupils moved to the new building in February 2006. The council’s plan was to sell the old site to pay off the costs of the new building (which had been largely funded by borrowing). Most of the old site was subsequently sold to a developer.
The dispute concerned whether the council was entitled to use the sale proceeds to pay off the costs of the new building or whether, under the SSA 1841, the statutory charitable trust of the land came to an end in February 2006 so that the proceeds were held for the benefit of Mr Fleming’s heirs. The question turned on s2 SSA 1841, which provided that if the benefacted land ‘ceased to be used for the purposes in this Act, the same shall thereupon immediately revert’, and s14 SSA 1841, which provided that if:
‘… it shall be deemed advisable to sell or exchange [the land] for any other more convenient or eligible site, it shall be lawful for the trustees… 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 the 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…’
It was agreed that s14 SSA 1841 could be used if, at the time of sale, the school was still operating on the original site. The question was whether the council could take advantage of s14 SSA 1841 if the land was sold with vacant possession and the proceeds applied to the costs of acquiring or improving a new site after the school had moved to the new site.
At first instance, Richard Spearman QC held that s14 SSA 1841 did not require the site to be sold before the school was moved. This was because, in his view, prior to the sale, the old site had not ceased to be used for the purposes of the SSA 1841.
The Court of Appeal allowed the appeal. Patten LJ (giving the leading judgment) held that the land had ceased to be used for the purposes of the SSA 1841 prior to its sale, and that the trustee could not keep the site vacant pending sale and then seek to apply s14 SSA 1841.
The council appealed to the Supreme Court. It argued that the site did not cease to be used for the purposes of the SSA 1841 because the sale proceeds from the site were to be used to pay off expenses for the new building. It argued that the sale was part of a pre-conceived plan to relocate the school and s14 SSA 1841 permitted the use of the proceeds in this way.
Mr Fleming’s heirs argued that the site did cease to be used for the purposes of the SSA 1841 as soon as it was no longer used as a school in around February 2006. They therefore argued that it reverted to Mr Fleming’s heirs under s2 SSA 1841 (and was therefore held on statutory trust for them pursuant to s1 Reverter of Sites Act 1987 (RSA 1987)).
Held (allowing the appeal):
Section 2 SSA 1841 does not admit of ‘very close linguistic analysis’. It operates through the medium of a charitable trust and should be interpreted in line with the recognition that charity law gives effect to a general charitable purpose or intention in a situation where the charity’s founder’s directions are or become impracticable. A provision providing for a determination of a trust by reverter should be a clear event and not a process. It was therefore appropriate to adopt a ‘broad and practical approach’ to whether, under s2 SSA 1841, a site had ceased to be used for the purposes of the SSA 1841. The same approach applied to s14 SSA 1841 (Fraser v Canterbury Diocesan Board of Finance (no 2) [2005]) applied). This approach is in line with the settled view that the courts should adopt a purposive approach to statutory interpretation where possible. This includes reading provisions in the context of the statute as a whole (IRC v McGuckian [1997], R (Quintavalle) v Secretary of State for Health [2003], and Attorney General’s Reference (no 5 of 2002) [2005] referred to). The court should therefore seek to interpret ss2 and 14 SSA 1841 as forming part of a coherent legislative scheme.
Another general aspect of statutory interpretation supporting a broad approach to the interpretation of the words in the SSA 1841 is that the Act was drafted in the less rigorous style which was normal before the creation of the Office of Parliamentary Counsel in 1869 and the adoption of more precise forms of drafting which followed (R (Andrews) v Secretary of State for Environment, Food and Rural Affairs [2016], TW Logistics Ltd v Essex County Council [2021], and Re Cawston’s Conveyance and the School Sites Act 1841 [1940] referred to).
The reference in Fraser (no 2) to reverter needing to be an event, not a process, means that, provided the event is conceptually clear, it does not matter that evidentially it may be difficult to find out when the event occurred (Re Gape [1952] referred to).
The focus on the purpose of the SSA 1841 requires an appreciation of the balance struck between the potentially conflicting interests of the grantor and the public. The approach of focusing on the protection of the grantor’s interests on the basis that this will encourage donations is accurate if one looks only at s2 SSA 1841, but requires qualification once one looks at s14 SSA 1841 because the latter clearly envisages that trustees might dispose of the site free of the s2 reverter and because s14 SSA 1841 is itself consistent with the grantors’ intentions in the different sense that grantors will not wish to recall their benefaction simply because their school is a success and needs to move to larger premises (Re Cawston’s Conveyance and the School Sites Act 1841 distinguished).
Further, two aspects of the reasoning in Fraser (no 2) indicate that the grantor’s interest might be outweighed by the public interest in the provision of education. The first is that s2 SSA 1841 only operates if the site ceases to be used for the statutory purpose (which is not read as being subject to any restrictions imposed by the grantor). The second is that Lord Walker tied s2 SSA 1841 into the general framework of charitable trust law. In line with this, the courts should lean toward the continuation of the purposes in s2 SSA 1841 rather than being astute to find that those purposes have failed thereby triggering a reverter.
Fletcher Moulton LJ’s statement in Attorney General v Price [1912] that s2 SSA 1841 did not permit land to be used as a means of revenue for educational purposes did not address the situation in the instant case. He was making the point that s2 SSA 1841 does not permit land to be rented out even for educational purpose but must instead be directly used for one of the statutory purposes. His reasoning had nothing to do with s14 SSA 1841.
Comments of Clauson J in Dennis v Malcolm [1934] were capable of possible interpretations other than as supporting the heirs’ position and in any case were obiter dicta.
Harman J’s judgment in Re Chavasse (1954) was helpful in illustrating that, while the permanent closure of a school is the relevant conceptually certain event, there may be evidential difficulties in determining when it had happened not least because it turns on the intentions of those involved.
Devices to prevent an s2 SSA 1841 reverter, such as staggering the move, deferring completion until the new site was ready, or selling the land on condition that the purchaser grant a licence to use the old site until the new site was ready, might be contrary to what was educationally desirable for the pupils and might deflate the sale price. This made it preferable to interpret ss2 and 14 SSA 1841 in a way which would render such devices unnecessary.
There were seven ‘essential reasons’ for favouring the interpretation of the first instance judge:
- (i) In general terms, the court should apply a ‘broad and practical’ approach and read ss2 and 14 SSA 1841 as a coherent whole. Additionally, the court should recognise that, because the SSA 1841 operates through the medium of a charitable trust, the court should lean in favour of its continuing rather than being ended by a s2 SSA 1841 reverter. This in turn reflects the balance struck in the SSA 1841 between the public interest and interest of the grantor.
- (ii) The conclusion in (i) was supported by para 43 of the Working Party of the Law Commission’s report Rights of Reverter. To interpret ss2 and 14 as the Court of Appeal did would frustrate the general policy of the SSA 1841 and would encourage devices with potentially unfortunate effects.
- (iii) Nothing in s14 SSA 1841 expressly or impliedly excludes the power to sell where the site is sold with vacant possession. One would expect such an exclusion to be spelt out in clear terms given that land is usually sold with vacant possession.
- (iv) The words ‘used or to be used’ directly support the interpretation of its being acceptable within s14 SSA 1841 for the school to have moved to the new site before the sale was completed.
- (v) There is no case law requiring that the correct sequence of events for s14 SSA 1841 to operate be one without vacant possession. The assumption in para 114 of the Working Party of the Law Commission’s report Rights of Reverter was wrong.
- (vi) Contrary to the view of Patten LJ in the Court of Appeal, this interpretation did not contradict the need for a reverter under s2 SSA 1841 to be triggered by a certain event rather than a process. It was incorrect to think that the triggering event could not be dependent on the intentions of the council.
- (vii) One could ‘usefully link’ the relevant words of ss2 and 14 SSA 1841 to produce the proposition that a school does not cease to be used for the purposes of the SSA 1841 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. Taking a broad and practical approach, the power in s14 SSA 1841 is to be interpreted as including the power to sell with vacant possession.
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