Can you sell a gift of land for development purposes once the site becomes redundant?

On 23 April 2021, the Supreme Court handed down judgment on the appeal of the case of Rittson-Thomas and others (Respondent) v Oxfordshire County Council (Appellant).

In giving judgment, the Supreme Court considered  whether title to land, which was gifted to Oxfordshire County Council (the Council) for use as a school under the School Sites Act 1841 (the 1841 Act), reverted to the donor’s estate when the school ceased to operate from the gifted land.

It is important for developers to understand the conclusions that the Supreme Court reached since schools are increasingly moving to new purpose-built premises which meet the needs of modern day teaching requirements and land for development becomes harder and harder to obtain.

Nettlebed School and The 1841 Act

In 1914 and 1928, Mr Fleming gifted land to the Council for use by Nettlebed School under the 1841 Act. Section 2 of the 1841 Act 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. A condition of that donation under the 1841 Act is that if the land ceases to be used for those purposes, it is returned (through a trust of land as amended by the Reverter of Sites Act 1987) to the landowner, or his or her heirs. This is often termed a “statutory reverter”.  

However, there is provision under the 1841 Act, specifically Section 14 which overrides the statutory reverter and which permits the school’s trustees the power to sell or exchange the land to enable the school to move to a different site should the school need new premises. The right granted by section 14 can only be relied on if there has not already been a statutory reverter.

In the 1990’s, the Council determined that Nettlebed School could benefit from a new building with improved facilities. For ease of relocation and practicality, the Council constructed the new premises before Nettlebed School relocated. Once the land and old buildings had been vacated, they were then marketed for sale for development purposes. 

Mr Fleming’s heir’s then came forward to claim the proceeds of sale as they claimed that by vacating the land gifted by Mr Fleming, the land ceased to be used for the purposes for which it was gifted and therefore must be returned. The Council argued that the Land had not ceased to be used for the purposes of Nettlebed School as even after the School had moved the land was to be sold for its benefit as the proceeds were to be used to pay for the costs of the new premises. 

The dispute and “Rights of Reverter”

The Council and Mr Fleming’s heirs’ interests were in conflict and the Court had to consider whose interests should prevail and be protected. Historically, it seems that reverters’ interests were to be protected as confirmed by the Law Commission’s 1981 Rights of Reverter report which set out that for a sale to occur under section 14 of the 1841 Act, it must be carried out before the school closed.

However, the Supreme Court decided that the power under section 14 of the 1841 Act was to be interpreted as a power of sale, to sell with vacant possession (namely after the school had been closed and vacated) providing that at the time that school is closed (and at all material times) it was the intention to sell the land to purchase another site and/or to improve the facilities. This confirmed that by closing the school and vacating the premises, section 2 had not been triggered and it would not revert to Mr Fleming’s heirs as it was always the Council’s intention to use the land to pay for the new premises for Nettlebed School.

What this decision means for developers

This means that developers can liaise with Local Authority about the purchase of land gifted under the 1841 Act and providing the conditions set out by the Supreme Court are satisfied, there need be no concern about the risk of reverters coming forward to object to, delay or impact on the sale of the land. It will also mean that a Local Authority can more readily and easily offer vacant possession of any land. Without the need to stagger movement to the new premises, it is likely to speed up the ability to develop the site. Developers should be aware that may result in inflated sale prices for land of this nature.