Judgments - Fraser and another (Appellants) v. Canterbury Diocesan Board of Finance and others (Respondents)

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    28.  This provision for reverter (not found in the School Sites Act 1836, which was repealed by the 1841 Act) was intended to encourage landowners, and especially limited owners interested in settled land, to make use of the powers conferred by the 1841 Act. This was explained by Sir Wilfrid Greene MR in In re Cawston's Conveyance and the School Sites Act 1841 [1940] Ch 27, 33-34:

    "One can see that the provision with regard to reverter would have been and no doubt was considered by the Legislature to be a very useful encouragement to charitably minded persons, particularly if they were the owners of an estate or life tenants of a settled estate, to make grants for purposes such as these, because such persons might very well be satisfied to have the village school built upon the family estate, but would strongly object to the site on which such a school had been built being diverted later on to other purposes; therefore, as I have said, that proviso as to reverter must have been a very valuable encouragement, because landowners by reason of it were thus enabled to ensure that the site should be used in perpetuity for school purposes, or, if it ceased to be used for school purposes, that they would get it back. The common sense of that is obvious."

This general statutory intention is not in dispute, though it should be noted that the effectiveness of the encouragement may have been reduced, if the grantor directed his mind to it, by a statutory power of sale conferred by section 14 of the 1841 Act.

    29.  The historical background to the 1841 Act and the facts directly relevant to this appeal reflect the slow and sometimes contentious development of universal elementary education in this country over two centuries. At the beginning of the 19th century the general state of education was very bad. Many grammar schools, founded for poor students, had become fee-paying schools for children of the gentry or the professional classes. The children of the poor often received little or no education, even at an elementary level. A number of voluntary societies, almost all with a strong religious affiliation, were founded in order to improve the education of the children of the poor. The largest and best known of these, strongly affiliated to the Church of England, was (by its full name) the National Society for Promoting the Education of the Poor in the Principles of the Established Church throughout England and Wales ("the National Society"), which was incorporated by Royal Charter in 1817, with the Archbishop of Canterbury for the time being as its president. Societies of this sort attracted a certain amount of jocularity even from contemporaries, including Dickens (especially in the grotesque characters of Mrs Jellyby and Mrs Pardiggle in Bleak House) and they were no doubt suffused, to a present-day observer, by a great deal of class-consciousness and condescension; but they achieved something at a time when Parliament had taken no effective measures towards universal elementary education.

    30.  The National Society raised large sums by subscription and made grants in favour of schools in which children were to be instructed (in addition to reading, writing and arithmetic) in holy scripture and in the liturgy and catechism of the established church (see National Society v School Board of London (1874) 18 Eq 608, 609). Its aim was to have such a school in every parish in the country (many of the authorities refer to village schools, but often the educational need was even greater in rapidly-growing urban centres). There was no reference to the Church of England in section 2 of the 1841 Act (only a general reference to "the education of such poor persons in religious and useful knowledge"). This was in contrast to section 3 of the School Sites Act 1836 (6 & 7 Guil IV c 70) (repealed by the 1841 Act); section 3 had referred to education in the Christian principles of the established church, and had actually identified the National Society as a potential grantee.

    31.  The relatively secular character of section 2 of the 1841 Act did not reflect the fact that at first the National Society and similar Church of England or free-church societies were economically the driving force of the new voluntary schools. Section 10 of the 1841 Act provided an optional form of grant, the habendum of which (with its original parentheses) was as follows:

    "To hold unto and to the Use of the said and his or their [Heirs, or Executors, or Administrators, or Successors,] for the Purposes of the said Act, and to be applied as a Site for a School for Poor Persons of and in the Parish of and for the Residence of the Schoolmaster [or Schoolmistress] of the said School [or for other Purposes of the said School], and for no other Purpose whatever; such School to be under the Management and Control of [set forth the Mode in which and the Persons by whom the School is to be managed, directed, and inspected]."

In practice the National Society required schools which it was proposing to support to be established by a fuller standard form of grant which provided for inspections (a requirement if the school was to be eligible for grants of public funds which were available after 1839 from the Privy Council's Committee on Education) and requiring the children to be educated in accordance with the principles of the National Society—that is, the principles of the Church of England.

St Philip's School, Maidstone

    32.  All these points are illustrated by the history of the school to which this appeal relates. It came to be known as St Philip's Church of England Primary School, Melville Road, Maidstone. It opened in 1863 in premises which it did not own, but in 1866 it acquired those premises (by purchase for £265 from the trustees of the will of Mr John Mercer) and some adjoining land (by gift from Mr John Monkton), and these together formed the site for a new school building, which opened in February 1867. It was in continuous use from then until July 1995, when it closed permanently.

    33.  The two pieces of land were conveyed to the school trustees (the Minister and Chapel Wardens of St Philip, Maidstone) by a single deed dated 5 April 1866. It was expressed to be made under the authority of the 1841 Act and the School Sites Act 1844 (7 & 8 Vict, C 37) (which made minor amendments, not now material, to the 1841 Act). The habendum of the grant was as follows:

    "To hold the same unto and to the use of the said Minister and Chapel Wardens their successors and assigns [subject as to part of the land to certain covenants] upon trust to permit the said premises and all buildings thereon erected or to be erected to be forever hereafter appropriated and used as and for a school for the education of children and adults of the labouring manufacturing and other poorer classes in the Ecclesiastical District of St Philip, Maidstone aforesaid and for no other purpose."

This was followed by a direction as to the school being open to official inspection (a requirement for a Privy Council grant) and a further direction that the school should,

    "always be in union with and conducted according to the principles and in furtherance of the National Society."

There were detailed provisions for the school to be controlled by a committee, with the principal officiating minister of the parish acting as chairman. Members of the committee were required to subscribe at least £1 a year to the charity; to be members of the Church of England; and to live in or near the parish.

    34.  The trusts of the deed were therefore narrower than the statutory pattern in two respects. They were framed exclusively in terms of the first of the three statutory purposes ("a school for the education of poor persons"), and they required the children's education to be in accordance with the principles of the Church of England.

    35.  A few years after the school was established, Parliament passed the Elementary Education Act 1870 (39 & 40 Vict, c 79) ("the 1870 Act"). This statute was the first step towards the provision of elementary education for all children at public expense. It set up school boards with the duty of providing public elementary schools. Section 14 prohibited religious teaching distinctive of any particular denomination being given in a public elementary school which was provided (as opposed to being merely maintained) by a school board. Section 23 empowered managers of existing elementary schools to transfer their schools to their local school board, which could agree to assume responsibility for the school. Many schools supported by the National Society or other voluntary societies were in difficult financial circumstances, and their managers sometimes decided to transfer their school to the school board, despite the prohibition on religious teaching of a denominational character. This naturally upset the National Society, but (as was established by National Society v School Board of London (1874) 18 Eq 608) it had no remedy apart from making representations to the Education Department. National School v School Board of London is a useful source of background information but is not directly relevant to the issues in this appeal, since the committee managing St Philip's school did not exercise the power conferred by section 23 of the 1870 Act. The school remained a Church of England school in the voluntary sector. It became a public elementary school under the Education Act 1902, which replaced school boards by local education authorities and brought within its scope elementary schools maintained (although not provided) by local education authorities. Under the Education Act 1944 the school became a voluntary controlled school.

    36.  Over the years, however, there were changes in the characteristics (in point of residence and social class) of children who attended the school. These changes were the subject of some documentary evidence and written witness statements (on which there was no cross-examination) before the judge. I will address this evidence in a little more detail later on, but it is common ground that although throughout the life of the school the majority of the pupils were resident in the parish and came from families which could properly be described as poor, some were resident outside the parish (the average figure between 1931 and 1947 was about 16%) and some came from parts of Maidstone where the residents were relatively prosperous.

    37.  Under a scheme made in 1952 the title to the school premises was vested in the respondent the Canterbury Diocesan Board of Finance ("the Board of Finance"). There was a reorganisation of parishes in 1972 but it is common ground that it does not affect this appeal.

    38.  Following on a Law Commission report (Cmnd 8410, published in 1981) on Rights of Reverter, Parliament enacted the Reverter of Sites Act 1987 ("the 1987 Act"). This makes various amendments to the law, some of which have since been modified in technical respects by the Trusts of Land and Appointment of Trustees Act 1996. The most far-reaching change (made by section 1 of the 1987 Act) was that rights of reverter under the School Sites Acts (and some other comparable statutes) were abolished and replaced by a trust for sale in favour of the persons who (but for the 1987 Act) would be entitled under the reverter (but without entitling them to occupation of the land). This had several important consequences which are not spelled out explicitly in the 1987 Act. The trustees can make a good title to the land (as they did when the school was sold in 1995 for about £125,000). Since trustees cannot acquire title by adverse possession against their beneficiaries, the beneficiaries' rights (if subsisting on 17 August 1987, when the statute came into force) cannot after that date be extinguished by adverse possession. But they may be extinguished by a Charity Commissioners' Scheme or a Ministerial Order under provisions in sections 2 to 5 of the 1987 Act. The details are not relevant, because by section 1(4) of the 1987 Act it confers no rights on any beneficiary whose claim has been statute-barred before 17 August 1987. The only issue in this appeal is whether there was a reverter followed by a period of 12 years' adverse possession completed before 17 August 1987. The evidence suggests that if there was a reverter, it would most probably have occurred during the first half of the 20th century; but the critical cut-off date is 17 August 1975. That is the date which (after the claimants had commenced Part 8 proceedings on 25 October 2001) was specified in the Master's Order dated 28 January 2002 directing a preliminary issue:

    "Whether the ownership of the site of St Philip's Church of England Primary School, Melville Road, Maidstone, Kent, reverted pursuant to the third proviso to section 2 of the School Sites Act 1841 before 17 August 1975, ie more than 12 years before the commencement of the Reverter of Sites Act 1987."

    39.  The appellants are genealogists who are assignees, no doubt for value, of the equitable interests of the persons now interested, by testate or intestate succession, in the estates of John Mercer and John Monkton. But Mr McCall QC (for the Board of Finance) did not suggest that this had any bearing on the legal strength of their claims. Indeed he chivalrously refrained from drawing any attention to this aspect of the matter; but it is apparent from the papers before the House.

The determinative issue: the proceedings below

    40.  The order directing a preliminary issue also directed standard disclosure "if required," but it was not required. The documentary evidence voluntarily provided by the Board of Finance included extracts from a "logbook" chronicling events in the life of the school; the (meticulously kept) school register for the period between 1931 and 1947; and extracts from rate-books (which provided some tenuous evidence of the prosperity of different parts of Maidstone). There was a witness statement from Mr R C Harris, who was a pupil at the school between 1947 and 1950.

    41.  The judge (Lewison J) summarised the effect of the evidence in paras 44 and 45 of his judgment as follows:

    "An analysis of the school registers for 1931 to 1947 shows that the children came from a variety of housing stock. Some came from what were, historically, middle-class streets of owner-occupied houses. Mr Harris lived in one such street, and his father, who worked for the local electricity board, owned his own house. An examination of the Maidstone rate-books for this period shows that some of the children lived in houses with high rateable values. I was shown photographs of some of these houses which were plainly comfortable and relatively spacious houses. However, further analysis by Mr Neil Fraser demonstrated that many of the higher rated houses appeared to have been in multiple occupation and others of them may well have been highly rated because the hereditament also included a shop. In the case of those children who lived in hereditaments including a shop, they may have been the children of 'tradesmen', who were specifically mentioned in the 1851 Act, but not in the conveyance.

    Mr Harris said in his evidence that the former parish of St Philip contains a variety of housing including premises which belonged to the local authority and premises in and around Stone Street, Maidstone which would certainly have been occupied by the poorer classes. He, however, lived in a 'better class area', as did a friend of his, who also attended St Philip's and was the son of a police inspector. He concluded that, having looked at the register, there were clearly a mixed variety of pupils being admitted to the school, some from very obviously poor backgrounds but some clearly from a more wealthy area."

The judge's reference to the 1851 Act should, I think, have been to the School Sites Act 1852 (15 & 16 Vict, c 49) ("the 1852 Act"). There was a School Sites Act enacted in each of those years, but it was the 1852 Act which extended the permitted purposes to the "religious or educational training of the sons [but not, regrettably, the daughters] of yeomen or tradesmen." But the 1852 Act does not seem to have been mentioned in the Court of Appeal, and Mr Nugee QC (for the appellants) placed no reliance on it before your Lordships.

    42.  Neither side challenged the judge's findings of fact set out above. The dispute centres on four paragraphs later in his judgment, with which the Court of Appeal found fault. The judge was using "qualifying persons" to mean pupils who were (i) "of the labouring manufacturing or other poorer classes" and (ii) resident in the ecclesiastical district of St Philip. In the crucial passages he began by summarising the argument for the Board of Finance:

    "66.  Mr Chapman submits that that is not this case. In the present case there is no evidence that the trustees had an admissions policy that restricted admission to qualifying persons. So far as the evidence goes, the trustees never rejected any pupil either on the ground that he or she lived outside the ecclesiastical district or on the ground that he or she was not a member of the relevant social classes. The school was simply open to any child who wished to attend it. Once the school simply became part of the state education system it ceased to be used for the purpose specified in the conveyance.

    67.  In my judgment Mr Chapman is correct to submit that the way in which the school was run indicates that its purpose was to educate not merely qualifying persons, but others as well. In my judgment it was a breach of trust for the school to have adopted a policy of educating children who were not resident in the ecclesiastical district of St Philip and who were not from the relevant social classes. Thus I do not accept Mr Nugee's submission that the school was not being used for a purpose other than that set out in the conveyance.

    68.  It is Mr Chapman's next step that I cannot take. Mr Chapman submits that the purpose for which the school was used was the education of all-comers and not for qualifying persons. That is a different purpose from the education of qualifying persons and hence use of the land for the purpose specified in the conveyance ceased (or perhaps never even began).

    69.  I do not characterise what happened in that way. If land is conveyed to be held on trust for purpose A and for no other purpose, and the trustees use the land for purpose A and also for purpose B, it seems to me that they are using it for two purposes, one of which is permitted by the trust and the other of which is not. What they have not done is to cease to use the land for purpose A merely because they are also using it for purpose B."

So the judge decided the preliminary issue in favour of the claimants.

    43.  The Court of Appeal reversed this decision. The main reasons are in the judgment of Arden LJ at paras 22-29 of her judgment; Potter LJ agreed with her; so did Wilson J, adding some further reasons of his own. Arden LJ took the judge to have found as a fact that the school had ceased to be used solely for the purposes set out in the trust deed. It had come to be used for a new and wider purpose, the provision of a school for all-comers (with no finding that priority was given to qualifying persons). The judge then, inconsistently with his own findings, treated the wider purpose as two separate purposes (his "purpose A" and "purpose B").

Arden LJ observed in para 24,

    " … the fact that a breach or breaches of trust have occurred does not necessarily mean that the authorised purpose has ceased to be the purpose for which the school is used."

But she also observed in para 25,

    "Nor do I accept the submission that the construction which I place on section 2 makes the trustees' title precarious. It simply means that the trustees must adhere to purposes permitted by the terms of the trust."

Wilson J also attached importance (para 32) to the words "and for no other purpose". So the Court of Appeal allowed the appeal and declared that reverter occurred before 17 August 1975. The determinative issue: discussion

    44.  My Lords, I cannot wholly accept the reasoning by which the judge proceeded from his undisputed findings of primary fact. But neither do I agree with the Court of Appeal's criticism of his reasoning. I do not think that the judge was entitled to infer, from the rather meagre evidence before him and the limited findings which he made on it, that the trustees of the school had an "all-comers" admissions policy and that the adoption of that policy amounted to a breach of trust. The school's committee of management might be expected to have kept minutes of their meetings recording any important policy decisions; none were produced and put in evidence by the Board of Finance, and it hardly lies in their mouths to ask the court to infer a breach of trust from a gap in their own evidence. There is no evidence that any fully qualified child was ever refused admission to the school as a result of an all-inclusive admissions policy. An equally probable explanation (and one which should be preferred in the absence of any evidence of breach of trust) is that the management committee recognised the need to keep up enrolment at the school, in order to maintain its financial viability, and accepted pupils from outside the geographical area of the ecclesiastical district, or from middle-class homes, so far as necessary to fill up numbers.

    45.  Such a course of action would not to my mind amount to the adoption of a new, unauthorised trust purpose. Neither section 2 of the 1841 Act nor the trust deed admits of very close linguistic analysis (the inter-relationship between the statute and the trust deed is something that I shall return to). But some general principles are clear. It is clear that both the statute and the trust deed were intended to set up arrangements capable of lasting for a very long time—potentially for ever. Both were intended to operate through the medium of a charitable trust. Charity law has for centuries required that a general charitable purpose (or intention) should be recognised and given effect to, even though some particular directions given by the charity's founder are (or become) impracticable: see for instance the explanation given by Buckley J in In re Lysaght (deceased) [1966] Ch 191, 201-202. It is also a well-established principle of trust law that any provision determining or divesting an estate "must be such that the Court can see from the beginning, precisely and distinctly, upon the happening of what event it was that the preceding vested estate was to determine" (Lord Cranworth in Clavering v Ellison (1859) 7 HLC 707, 725, cited in Sifton v Sifton [1938] AC 656, 670, and in Clayton v Ramsden [1943] AC 320, 326). As Mr Nugee put it in his written submissions, reverter is an event, not a process (and if it occurs, it is automatic and irrevocable.)

    46.  All these considerations suggest that the court should take a broad and practical approach to the question whether a school has (in the words of the third proviso) ceased "to be used for the purposes in this Act mentioned" (and that it is not simply a coincidence that all the reported cases are concerned with schools which had closed permanently). The relevant statutory purpose was "the education of poor persons" (the school never gave up its Church of England connection, so I can for the present pass over the question of how significant that change would have been.) Mr Nugee in the course of his reply (which was all the more effective for its brevity) posed the question which might have been put to the school managers (around the middle of the 20th century or at any time up to 1975), "Are you still providing education for the poor of the parish?" To my mind that question could only have received an affirmative answer, and that is determinative of this appeal.

The further issue: statutory purposes or trust purposes?

    47.  That is sufficient to dispose of this appeal. But the House also had the benefit of written and oral submissions on a further issue, which was (as it happens) raised between the same parties in separate proceedings about another school, at Chartham in Kent. Those proceedings reached the Court of Appeal: see Fraser v Canterbury Diocesan Board of Finance [2001] Ch 669 ("Fraser (No 1)"). They were deciding in favour of the Board of Finance and there was no further appeal. The judgment of your Lordships' House in the present appeal cannot alter the outcome of Fraser No 1. But it may be that this House will never again have to consider the 1841 Act, and it may be many years before it comes before the new Supreme Court. For that reason I think that the House should take this opportunity of achieving some further clarification of this obscure area of the law.

    48.  Fraser No. 1 was a case where a grant was made under the 1841 Act in 1872 (that is, after the coming into force of the 1870 Act) and the school had in 1874 been transferred to a school board under section 23 of the 1870 Act. The school closed permanently in 1992. The issue was whether reverter had occurred in 1874, with the result that the claim of those interested under the reverter had long since become statute barred. The original grant under the 1841 Act followed the National Society standard form, and so was very similar to the grant relating to St Philip's School at Maidstone.

    49.  Whether a reverter had occurred in 1874 depended on whether (in the words of the third proviso to section 2 of the 1841 Act) the land had "ceas[ed] to be used for the purposes in this Act mentioned." The land had continued to be used as a school until 1992, but as long ago as 1874 it had ceased to be a school run in accordance with the principles of the National Society and the established church—as Mummery LJ put it, in delivering the judgment of the Court of Appeal ([2001] Ch 669, 675, para 6), it had "lost its essentially Church of England character."

    50.  The Court of Appeal, upholding the deputy judge, held that reverter had occurred in 1874. Mummery LJ reasoned as follows (p 681, paras 30 and 31):

    "As already explained the purpose of the 1841 Act was to reform certain aspects of the law of real property so as to facilitate and encourage grants of land as school sites. In order to come within the Act the grant has to be for one or more of the three purposes mentioned in section 2, ie for the education of poor persons, or for the residence of a schoolmaster or schoolmistress, or otherwise for the purposes of the education of such poor persons in religious and useful knowledge. But the Act does not expressly or impliedly require the grant either to be for all of those purposes or to be for purposes expressed in those very words. The grantor, like any other benefactor of charity, is allowed freedom of choice as to the precise object of his bounty, so long as his stated purpose is within the scope of one or more of the purposes mentioned in section 2.

    The purposes chosen by [the grantor] were within the limits of the third purpose allowed by section 2. The purposes specified in the 1872 conveyance followed a model deed of the National Society, one of the principal pressure groups in the 1830s for the school sites legislation. The correct approach is to ask whether the school ceased to be used for those purposes and, if so, when."

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