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

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    In reaching this conclusion the Court of Appeal approved and followed two first-instance decisions, one by Warrington J in Attorney General v Shadwell [1910] 1 Ch 92 and the other by Rimer J in Habermehl v Attorney General [1996] EGCS 148. It is therefore necessary to examine those cases.

    51.  In Attorney General v Shadwell a grant under the 1841 Act in the National Society's standard form had been made in 1868 for a school at Northolt with (as Warrington J said at [1910] 1 Ch 92, 94) "elaborate provisions intended to secure what I may call the Church of England character of the school." The school was run on that basis (though latterly, it seems, as a maintained public elementary school) until 1907, when the local education authority opened a provided school on a different site. The church school then ceased to be used except for weekly use as a Sunday school, and the first defendant (a party to the original grant) claimed that reverter had taken place when the school ceased to be used during the week. He argued that the use of the premises as a Sunday school was not one of the trusts or objects of the grant, but was only a power which continued as long as the main purpose continued.

    52.  Warrington J accepted this argument. He said at p99:

    "I think you must read 'the purposes in this Act mentioned' as meaning such of those purposes as are applicable to the case in question, namely, the purposes to which the land was devoted by the grantor. Now to what purpose was the land devoted in the present case? There can, I think, be only one answer to that question—to the purpose of a day school for the education of the poor, to be conducted according to the principles and in furtherance of the ends of the National Society. The mere holding of a Sunday school does not fulfil that purpose."

    He held, therefore, that reverter had occurred.

    53.  Mr Nugee accepted the correctness of that decision, but submitted that it had been misunderstood or misapplied in later cases. What Warrington J was saying, Mr Nugee submitted, was that if land was granted for the first statutory purpose (the education of the poor) an ancillary power to run a Sunday school could not be elevated (as the Attorney General had argued) into a trust for the third statutory purpose.

    54.  The first case in which Attorney General v Shadwell [1910] 1 Ch 92 was followed was Habermehl v Attorney General [1996] EGCS 148, a decision of Rimer J concerning a school at Kempston, Bedfordshire. In that case a grant under the 1841 Act was made in 1854 in what has now become familiar as the National Society standard form. There were two later grants of adjoining land on the same trusts. In 1876 the school managers agreed to let the school to the local school board. The effect of this was that the school became a "provided" school to which section 14 of the 1870 Act (prohibiting religious instruction or observance of a denominational character) applied. The school was burned down in 1975 and never reopened. The dispute was as to the beneficial ownership of the insurance money and the vacant site.

    55.  The Attorney General's counsel argued that reverter had occurred in 1876, and that the charity trustees had long since acquired a title by adverse possession. The Official Solicitor (representing unascertained claimants under a reverter) argued that reverter occurred no earlier than the fire in 1975. Rimer J quoted at some length from the judgment in Attorney General v Shadwell, including the passage which I have set out. He concluded that the principle of the decision was that the statutory purposes referred to in the third proviso to section 2 of the 1841 Act meant "the purposes to which the land was devoted by the grantor." He concluded that the question which he had to answer was

    " … whether the loss of the school's Church of England character upon its becoming a provided school in 1876 was a change which meant that the land was no longer being used for the substantive purposes for which it had been devoted by its grantors."

    He answered that question by accepting the submission made on behalf of the Attorney General, that after 1876 the purposes of the grant were no longer being fulfilled, and so reverter occurred.

    56.  I accept Mr Nugee's submission that Attorney General v Shadwell was rightly decided, but that Rimer J mistook its real significance. Rimer J's error was (if I may respectfully say so) one to which Warrington J had to some extent contributed, because he did include "the principles and … the ends of the National Society" in his statement of the primary trust. But there had been no interruption of the Church of England connection in Attorney General v Shadwell; on the contrary, the religious instruction and observance at the Sunday school had taken over as the only surviving activity; and as was pointed out by counsel arguing for reverter ([1910] 1 Ch 92, 96) the 1841 Act was intended to promote education, not religion. So the breaking of a Church of England connection was simply not an issue in the case.

    57.  The real principle in Attorney General v Shadwell is that there must be a cesser of a relevant statutory purpose, which is to be identified by looking at the terms of the grant. The case does not establish that the terms of the grant (if relatively narrow and detailed) cut down the breadth and simplicity of the statutory purpose (with the result that a reverter is more likely to occur). Such a conclusion would be contrary to the views of the majority of the Court of Appeal in Attorney General v Price [1912] 1 Ch 667 (and it is to be noted that Buckley LJ differed only as to the terms of the proposed scheme). This decision's authority is reduced both by the non-joinder of persons interested under a possible reverter and by this House having discharged the Court of Appeal's order as part of a compromise (see [1914] AC 20). But at the least it shows that there is nothing in the 1841 Act that automatically excludes the possibility of a cy-pres scheme.

    58.  In Fraser No. 1 the Court of Appeal mistook the significance of Attorney General v Shadwell in the same way as the judge had in Habermehl v Attorney General. I have already set out paras 30 and 31 of the judgment of the court. It is entirely correct that the 1841 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."

    But if the grantor's stated purposes are narrower and more detailed and elaborate than the statutory purposes, non-compliance with them (in particular, by severance of a Church of England connection) will not necessarily result in the cessation of the statutory purposes, and consequential reverter. Reverter (after 1987, in equity) will occur only if the relevant statutory purpose is no longer being carried out. The first statutory purpose in section 2 is consistent with wholly secular (that is, non-religious) education, even if a grantor has made an express declaration that the school is to be run as a Church of England school. The third statutory purpose in section 2 cannot be used to alter the character of a grant which falls squarely within the first purpose.

    59.  For these reasons I consider that Habermehl v Attorney General and Fraser No. 1 were wrongly decided. But that conclusion does not affect the practical consequences of the decision of the Court of Appeal in Fraser No. 1, from which there has been no appeal, and it is not directly relevant to the outcome of this appeal, which turns on different issues. For the reasons stated in the preceding section of this opinion, I would allow this appeal and restore the decision of Lewison J on the preliminary issue.

LORD BROWN OF EATON-UNDER-HEYWOOD

My Lords,

    60.  I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Hoffmann and Lord Walker of Gestingthorpe and for the reasons they give, I too would allow the appeal and make the order they propose.

 
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