Back to School: Rights of Reverter

The recent case of Rittson-Thomas v Oxfordshire County Council underlines the challenges and necessity of specific legal expertise when dealing with property transactions in the charity, education and faith sectors. The case concerned a school moving from one site to another when rights of reverter applied. The Case serves as a reminder that the complexities involved in the nineteenth Century legislation are still just as relevant today.

1. Background

The Schools Sites Act 1841 (‘the Act’) (as amended by the Reverter of Sites Act 1987) was enacted primarily to encourage landowners to gift land for schools although it did allow land to be given for other purposes (for example as a teacher’s house). As an incentive, section 2 of the Act provides that if land gifted ceases to be used for the charitable purpose for which it was given (i.e. use as a school), title would ‘revert’ to the landowner, or their heirs, hence the term ‘reverter’.

Section 14 of the Act, however, contains a power by which the trustees of a school subject to reverter can sell or exchange the gifted land for a replacement school site without reverter being triggered, with any proceeds being applied in the purchase or improvement of the replacement site.

The question under consideration in the case was one of use – did use as a school cease on vacating the original site?  Or did use as a school continue as a result of the school’s intention to sell the original site and to apply the proceeds towards the replacement site?

2. Facts

Two parcels of land were conveyed to Oxfordshire County Council (‘the Council’) in 1914 and 1928 under the Act for use as part of Nettlebed Primary School.

In the 1990s, the Council decided to relocate the school and to part-fund the move with the expected proceeds of sale from the original school site.

The new school was built and the students were transferred from the old school to the new school in 2006. The original school site was then left vacant and unused until its sale in 2007.

Heirs of the donor claimed that reverter had been triggered when the Council moved the school to its new site in 2006. This meant that they, and not the Council, were entitled to the majority of the proceeds of sale from the original school site.

3. Decision

The High Court interpreted sections 2 and 14 of the Act broadly and held that holding an empty site with the intention of applying the proceeds of sale towards the benefit of the school was sufficient to satisfy use as a school and, therefore, reverter was not triggered.

The Court of Appeal, however, reversed the High Court decision and held that the wording of the statute, even in the broadest sense, did not allow intention to be seen as use. Therefore, as the original school site had been vacated and left unused for over a year, reverter had triggered. This meant that approximately £1.25 million representing the sale proceeds of the old site had to be held by the Council on trust for the heirs of the original donor.

4. Conclusion

The Court of Appeal decision highlights that where reverter is present, continued use for the statutory purpose set out in the conveyance or transfer of the land originally is crucial and intention does not suffice as use. Great care should be taken because at the time of sale it may already be too late.

Key considerations where rights of reverter exist

Sellers

It is essential to ensure that the use of land as a school continues up until the point of sale. It may be that ancillary activities such as “as a playground” or “for meals” may suffice, but advice should be sought.

Buyers

Amongst other things, ensure that the history of the land is properly investigated and that the vendors have all of the rights necessary to transfer the land free from interests. Also make sure that the protected use does not continue after purchase. The danger is that rights of reverter may not be defeated.

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