Council wins Supreme Court appeal over claim of £1.2m from heirs of school benefactor

The Supreme Court has allowed Oxfordshire County Council's appeal in a case in which a family said the sale of school land worth £1.2m, which was gifted to the council by their late family member, was unlawful.

The claimants, who are heirs of the late Robert Fleming who conveyed land to Oxfordshire County Council in 1914 and 1928 under the School Sites Act 1841, said that since the council sold the land after (and not before) moving the school to another site, it had "reverted" to Mr Fleming's estate.

The council relocated the school and sold the site, after the move, to help pay for the costs of the new school premises. In February 2006, the pupils moved to the new premises and, in September 2007, almost all of the Fleming site was sold to a property developer for £1,243,819.50.

Four of Mr Fleming's heirs brought the claim, which said that since the land had been left empty for seven months after the move in 2006, the council had been holding the Fleming site on trust for the heirs when it was sold and should transfer the £1,243,819.50 over to them.

Oxfordshire County Council disagreed, arguing that it had always been the council's intention to apply the proceeds of sale to the new premises and that, practically, the pupils needed to move before the old site was sold.

The Supreme Court unanimously allowed the appeal as the Fleming site had not ceased to be used for the purposes of the school, even after the school had moved, as it was always the council's intention to use the proceeds of the sale to pay off the cost of the new school premises.

Lady Arden and Lord Burrows, who jointly gave the judgment, said two sections of the 1841 Act lay at the heart of the appeal, Section 2 and Section 14.

Section 2 provides that a landowner may donate up to one acre of land for various educational purposes, including the establishment of a school, by means of a statutory charitable trust. However, if the land ceases to be used for those purposes, it is returned (through a trust of land) to the landowner, or his or her heirs (a "section 2 reverter").

Section 14 provides that, should the school need new premises, the school's trustees have the power to sell or exchange the land which had been given for the school to enable the school to move to a different site. Sale under section 14 can only occur if there has not already been a section 2 reverter.

The case turned on whether the permanent closure of a school on the original site in preparation for sale gives rise to a section 2 reverter that ends the statutory charitable trust, with the effect that the trustees cannot use the sale proceeds to pay for the costs of the new school premises.

Considering the principles of statutory interpretation to be applied to sections 2 and 14, the court highlighted the decision in Fraser v Canterbury Diocesan Board of Finance (No 2) [2005] UKHL 65; [2006] 1 AC 377. In Fraser v Canterbury Diocesan Board of Finance, it was decided that as the 1841 Act is concerned with charitable purposes, section 2 had to be interpreted by applying a "broad and practical approach". Section 14 should be afforded the same approach, the court found.

The court then considered whether a balance was stuck between the potentially conflicting interest of the original grant (and his or her heirs) and the public.

The court said: "At one time it appears to have been thought that the protection of the grantor's interests should prevail, so that the primary focus was on protecting the section 2 reverter".

"However, this neglected the role of section 14," the court said, "which clearly envisaged that the trustees might dispose of the site free of the section 2 reverter."

Additionally, the court said that "in any event", the courts should lean towards the continuation of the charitable educational purposes set out in section 2 rather than being "astute to find that those purposes have failed, thereby triggering a section 2 reverter".

Lady Arden and Lord Burrows concluded: "Pulling these threads together, the court concludes that the Fleming site was not ceasing to be used for the purposes of Nettlebed School when the school moved to the new adjacent site, because there was an intention throughout by the council to use the proceeds of sale of the land to pay off the cost of the new school premises. No section 2 reverter was triggered [49]. As a general proposition, the site of a school does not cease to be used for the purposes of section 2 where at all material times it is considered advisable to sell the site and to apply the money arising from the sale for other premises used or to be used for the school [50(vii)]. The appeal is, therefore, allowed."

The other members of the court unanimously agreed.

Adam Carey