The law on reverter maybe “antiquated and obscure”  to quote a 1981 Law Commission working party report, but the recent case of Rittson-Thomas and others v Oxfordshire County Council is a good reminder of its continued relevance today.

On the sale of old school land, whether a right of reverter has occurred is an important consideration with financial consequences. In this case Oxfordshire County Council (‘the Council’) could apply the proceeds of sale from an empty school site towards the cost of building new school premises on an adjacent site.

The Facts

Two parcels of land were conveyed to the Council in 1914 and 1928 under the School Sites Act 1841 (‘1841 Act’) for use as part of a school. The donor of the land died in 1933.

The Council decided to relocate the school to adjacent land which it already owned and use the proceeds of sale from the original site to help provide money to pay the cost of building the new school premises on the present site. The new school was built, the children transferred from the old school to the new school in February 2006 and the original site sold in September 2007.

The claimants are some of the heirs of the donor. They submitted that a right of reverter was triggered in February 2006 when the school ceased to operate from its original site, and sought a declaration that the Council held a substantial part of the proceeds of sale from the original site on trust for the claimants.

The Law

Victorian legislation known collectively as the School Sites Acts was enacted to encourage landowners to give land for local schools before the nationwide availability of compulsory education at the public expense.

To come within the 1841 Act the gift has to be of up to one acre of land as a site for a school for the education of poor persons, the residence of a school master or mistress, or otherwise for the purposes of the education of poor persons in religious and useful knowledge.

As an incentive, provision was included in section 2 of the 1841 Act for the land to revert back to the landowner, or their heirs, if it ceased to be used for the purposes for which it was given.

Cessation of use is a question of fact. If the purpose is for ‘a school for the education of poor persons’, that use clearly ceases on the permanent closure of the school as an institution. However, where the original land or building is sold or exchanged for a replacement site under section 14 of the 1841 Act, the reverter is defeated. This provision confers a power of exchange for, or sale to acquire, another more convenient or eligible site and to apply the money arising from the sale or given on the exchange in the purchase of another site, or in the improvement of other premises.

When a reverter occurred those in possession of the land at that time had no power to dispose of or even to use the land. Problems arose when the donor, or their successors, as the persons entitled under the reverter, could not be identified or found. As the grants of land were made a long time ago, finding those persons entitled became increasingly difficult.  

The Reverter of Sites Act 1987 (‘1987 Act’) by section 1 replaced the reverter of land with a trust of land (‘reverter trust’). Those in possession of the land at the time the reverter arises are given the status of trustees, enabling them to sell the land and hold the proceeds of sale on trust for the benefit of the persons who would have been entitled to the reverter if the 1987 Act had not been passed, referred to as ‘beneficiaries’. 

Section 6(2) of the 1987 Act clarified that the power to sell or exchange lands or buildings conferred by section 14 of the 1841 Act was exercisable at any time in relation to land which (but for the exercise of the power) a reverter trust might subsequently arise. Further, the exercise of that power in respect of any land prevents any reverter trust from arising in relation to that land or any land representing the proceeds of sale of that land.

The Issues

The Law Commission working party report, entitled ‘Rights of Reverter’ (Cmnd. 8410), summed up the issue: “The provision authorising sale or exchange (section 14) does not itself contain anything to suggest its scope is restricted …; but there is, at the same time, something a trifle odd in providing a power of sale in relation to sites granted under … section 2 which prima facie revert if not used as schools.”  The Law Commission working party appeared to consider that to avoid the reverter under section 2 of the 1841 Act, a sale or exchange under section 14 of the 1841 Act would have to be carried out before the closure of the school. 

The court explored the inter-relationship between sections 2 and 14 of the 1841 Act and an inherent tension in interpretation. Reverter is an event, which once triggered is automatic and irrevocable. It cannot be undone by a subsequent exercise of the power of sale or exchange.

One approach says that land ceases to be used as the site for a school the moment that school closes. Whereas the power of sale or exchange is exercisable in order to enable a school to be moved from one location to another. Section 14 of the 1841 Act recognises that the original site may become too small (the gifts were limited in size) and that adjoining or adjacent land may not be available for expansion. The intention behind this provision would be frustrated if it was necessary, in order to avoid a reverter, for the school to remain occupied and in use at the original location until the new location is ready for the school to move into.

The court considered section 2 of the 1841 Act. Narrowly interpreted, the original site ceased to be used for its relevant purpose when the school relocated leaving the premises on the original site empty and not used. Viewed more broadly, cessation of use could equally occur when the original site was later sold. Although the school moved out of the original site to its new site, the original site was being sold to raise money to pay for part of the cost of the new buildings, and the original site was therefore being used for the purposes of the school.

A broader approach accorded with the power of sale or exchange conferred by section 14 of the 1841 Act.  A sale or exchange of one property “for” another does not necessarily have to involve a transaction in which the first property is conveyed before or at the same time as the second property is acquired. The same applies to the concept of applying the money “arising” from the sale of one property “in the purchase” or “in the improvement” of another. 

The Decision

The court held that the right of reverter had not been triggered and refused to make a declaration as to the proceeds of sale in favour of the claimants.

The court preferred a broad and practical approach. Sections 2 and 14 of the 1841 Act should not be considered in isolation. Properly interpreted section 14 of the 1841 Act does not require the original site to be sold first and the proceeds of sale only then applied towards the cost of purchase or improvement of other suitable land or buildings.

Holding an empty site to sell and apply the proceeds for the benefit of the school is a continued use of the land for the purposes of the school until the power of sale is actually exercised. This is not inconsistent with the 1987 Act and section 6 of the 1987 Act prevents the reverter trust that would otherwise arise from arising.

Practice Points

  • On the sale of old school land, it is important to consider whether a right of reverter has occurred.
  • Beneficiaries will continue to make claims as they become aware of their rights.
  • Schools conveyed under the School Sites Acts may be more able to accommodate a move to new premises and therefore Councils more willing to exercise a power of exchange for, or sale to acquire, another more convenient site. 
  • The decision is not binding precedent, but highly persuasive. If it is upheld it could result in challenges (subject to limitation) to payments already made on the basis that reverter of the land comprising the original site had occurred rather than a statutory sale or exchange for another site.

Rittson-Thomas and others v Oxfordshire County Council [2018] EWHC 455 (Ch)