Fraser Anor v Canterbury Diocesan Board of Finance & Anor

A statutory possibility of reverter under the School Sites Act 1841 is triggered when the relevant statutory purpose selected by the grantor ceases, assessed broadly and pragmatically. A sale does not itself trigger reverter if the land continues to be used for that purpose under a licence. Closure must be permanent in nature. A scheme under the Endowed Schools legislation concerning an educational endowment does not extinguish a grantor’s separate reverter rights unless the statutory power clearly provides for that result. Where reverter has occurred, sale proceeds may remain subject to the resulting trust if the statutory requirements for overreaching have not been satisfied.

The claimants asserted rights as revertees of land conveyed in 1866 for use as a school under the School Sites Act 1841. The land was vested in the first defendant under a 1952 educational scheme and was sold to the second defendant in 1995. The school continued operating under a licence until 21 July 1995, after which the second defendant operated a special-needs establishment on the site until about March 2000.

An earlier preliminary issue had been determined by Lewison J, reversed by the Court of Appeal, and ultimately resolved by the House of Lords in Fraser v Canterbury Diocesan Board of Finance (No 2) [2005] UKHL 65; [2006] 1 AC 377. The issues were whether the 1952 scheme extinguished the possibility of reverter, when reverter occurred, and against which defendant the claim lay.

1. The court refused permission to withdraw the defendants’ admission that the site remained subject to the possibility of reverter. The scheme point had no merit. Under sections 4, 5, 9 and 46 of the Endowed Schools Act 1869, the scheme-making power concerned the educational endowment and did not extend to the grantor’s separate possibility of reverter under the third proviso to section 2 of the School Sites Act 1841.

2. The reasoning in Bankes v Salisbury Diocesan Council of Education [1960] Ch 631 was applicable and, if anything, the present case was stronger because the 1841 Act had vested only a determinable fee in the school trustees. Section 86(2) of the Education Act 1944 could have expressly disapplied the reverter, subject to safeguards, but the 1952 scheme was made under section 86(1), with no evidence of compliance with section 86(2).

3. Reverter was not triggered by the sale on 30 June 1995. The relevant statutory purpose was the use of the site as a school for the education of poor persons. That use continued until 21 July 1995, despite the post-sale licence and the fact that the decision to close the school had already become irrevocable.

4. Reverter required permanent cessation. Applying the broad and pragmatic approach identified in the earlier House of Lords decision, temporary closure or closure pending a realistic intention to reopen would not suffice. The later special-needs establishment did not constitute a school for the education of poor persons. Reverter therefore occurred on 21 July 1995.

5. Even if reverter had occurred immediately before the 1995 sale, the second defendant would not have acquired the land free of the revertees’ interests. The trust arising under section 1 of the Reverter of Sites Act 1987 was private, and the first defendant’s trust-corporation authority did not extend to such a trust. The sale therefore did not overreach the beneficial interests under sections 2 and 27 of the Law of Property Act 1925. The second defendant held the land on trust for the revertees, subject to proof of title and subsequent quantification.

1. House of Lords restored Lewison J’s declaration that no reverter had occurred before 17 August 1975: [2005] UKHL 65; [2006] 1 AC 377.
2. Court of Appeal had previously held that reverter occurred before 17 August 1975: [2004] EWCA Civ 15.
3. High Court (Chancery Division) had initially held that no reverter occurred before 17 August 1975: [2003] EWHC 1075 (Ch). The present judgment determined the remaining issues.