Providers of schools in the state and independent sectors in England and Wales whose school sites were provided by private donors pursuant to the provisions of the School Sites Act 1841 (the ‘1841 Act’) will welcome the recent decision of the Supreme Court in Rittson-Thomas and others v Oxfordshire County Council (‘OCC’) (Rittson-Thomas and others v Oxfordshire County Council [2021 UKSE 13) which reversed the Court of Appeal decision which preceded it.
The Court of Appeal followed, what until now had been the orthodox line of thinking on this. The school had closed. The purpose for which the site had been given had ended and so reverter had automatically and irreversibly occurred. Upon reverter under the Reverter of School Sites Act 1987 (the ‘RSA1987’) the trustees now held the site on trust for the descendants of the original donor. This was the deal the State offered to donors of school sites that had been relied upon and that perpetuity rules would not frustrate a donor’s desire that if the school closed a site would go back to his/her descendants however many years later this occurred .
In Rittson Thomas the Supreme Court ruled that, for the purposes of sections 2 and 14 of the 1841 Act the school site had not reverted, despite school operations on the site having ended. It held that the site had not ceased to be used for the purposes of the school when the school moved to a new site. For reverter to be avoided it was sufficient that OCC could demonstrate that it had a clear intention throughout to apply the proceeds of sale of the former school site to improve the adjacent new school premises. Section 14 of the 1841 Act permitted a school site to be sold with vacant possession and the proceeds of sale to be used to pay off the costs of developing the new site.
PLC’s summary of the Court’s reasoning is compelling:
(I well recall the late Nicholas Richens article on that case entitled “The Heathen have come into their inheritance”)
Church of England Diocesan Boards of Education, their Roman Catholic equivalent and other boards of trustees elsewhere will be grateful for the Supreme Court’s pragmatic approach to this. Nonetheless, a few further comments on this case can be made:
1. School site trustees should not be complacent. Prior to this decision, trustees had to think and plan carefully when their school was relocating and the school site was subject to reverter. The writer has structured land swaps with private developers where a C of E school was relocating and the deal was that the developer provided the new school on the new, often larger site in exchange for the development opportunity afforded by the old school site being available for redevelopment
If you are private school site trustees better to do this and control by contract the new site to be provided to the school. It is not any new school which needs to relocate and continue to operate, but the particular school on the continuing school site trusts which must continue.
2. The former school site, certainly in a C of E school site situation, will generally be held on specie trusts as the permanent endowment asset of the charity. Its private value to the charity is not to be spent on development works which over time could be written off. This is the charity’s permanent endowment asset. It needs to be explicitly agreed that the private value of the charity be treated as invested in the bare land. Value added to land later through development workt, comes after, if at all, in the ranking. Such works downgrade over time. If and when that new site is sold many years later the site trustees should aim to be in a position to claim all, or as much of the net sale proceeds as is possible, for reinvestment by the charity in the school’s next site.
24th June 2021