OG27 Reverter of Sites Act 1987

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Policy Statement/Overview

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OG27 Reverter of Sites Act 1987 

OG27 A1 Legislation affecting the rights to reversionary interests 1 November 2002 

 

1. Introduction

 

At the beginning of the nineteenth century, individuals were encouraged to give land for certain charitable purposes, namely in the areas of education and religion. In order to encourage the giving of land for these purposes, legislation was enacted that allowed the land given to revert to the original owner or their heirs if that land was no longer used for the purpose for which it was given. Collectively, these separate pieces of legislation are known as the Relevant Acts.

 

The legislation was complex, and gave rise to much litigation, but the only parts which are relevant today are the provisions for Reverter.

 

A number of cases, particularly Re Ingleton [1956] 2 All ER 881, Re Clayton’s Deed Poll [1979] 3 WLR 351 and Re Rowhook Mission Hall [1984] 3 All ER 179, highlighted difficulties in the interpretation of the legal position of persons in possession of land at the time of reverter, and the nature of that possession following reverter, when the revertee did not assert his rights.

 

Problems also arose when, in the circumstances in which reverter should operate, the donor or his successors could not be found or identified. It became legally uncertain whether those in possession of the land could acquire a possessory title against the revertee. In this situation, the land could not be used for other purposes, disposed of, or used to raise money; with no active management, buildings on such land could deteriorate to the point of dereliction.

 

A working party established under the Law Commission examined these problems and produced a Report, 'Rights of Reverter' (Cmnd. 8410) in 1981, from which the Reverter of Sites Act 1987 was derived and passed into law on the 17th August 1987.

 

This legislation empowers the DfES and the Charity Commission, on the application of the trustees, to extinguish the rights of reverter and establish new charitable trusts for the property. OG 27 A2 provides an overview of the Reverter of Sites Act 1987. The making of Schemes under the 1987 Act is dealt with in OG 27 B2. For a flowchart to identify whether reverter has occurred, see OG 27 C3 and a flowchart to clarify the stages of making a Scheme is given in OG 27 C4. A list and description of the case law referred to in this series of OGs is found in OG 27 C7.

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2. The Relevant Acts

 

The original Relevant Acts are as follows. In each case, they set out uses for (mainly) small parcels of land to be used for the specific purposes described below.

 

The School Sites Acts provided for:

  • A site (of up to one acre) for a school or schoolmaster’s residence in connection with the education of the poor in religious and useful knowledge (s2 of the School Sites Act 1841);
  • A site (of up to two acres) for a school or college, including associated schoolmasters’ residences:
    • for the religious or educational training of the sons of yeoman, tradesmen, or others; or,
    • for the theological training of candidates for holy orders,

 

These buildings could be erected or maintained in part by charitable aid and in part, could be self-supporting (ie fees are paid) (School Sites Act 1852).

 

In each of the above cases, any number of such sites could be granted by a donor provided that each site was in respect of a distinct and separate school, and in a different parish (or, where the parish had been divided into ecclesiastical districts, in a different ecclesiastical district (School Sites Act 1851)).

 

S5 of the Schools Sites Act 1849 extended the provisions of the 1841 Act to cover absolute owners of land wishing to grant any quantity of land to corporate trustees to be held upon charitable trusts for the site or endowment of:

 

  • A school for the education and guidance of teachers for elementary schools for the poor; or,
  • A school for the poor.

 

The Literary and Scientific Institutions Act 1854 provided for:

 

a site (of up to one acre) for:

  • an institution for the promotion of science, literature , or the fine arts, for adult guidance, or for the diffusion of useful knowledge;
  • the foundation or maintenance of public, or members’ libraries or reading rooms; or,
  • the foundation of public museums, art galleries or collections of natural history, mechanical and philosophical inventions, instruments or designs.

 

Any number of such sites could be provided by a donor provided that each site was in respect of a distinct and separate institution (ss.1 and 33 of the Literary and Scientific Institutions Act 1854);

 

The Places of Worship Sites Act 1873 provided for:

 

  • A site (of up to one acre) for:
    • a church, chapel, meeting house, or other place of divine worship;
    • the residence of a minister officiating in a place of worship within one mile of the site; or,
    • a burial place.

 

Any number of such sites could be granted by a donor (s1 of the Places of Worship Sites Act 1873).

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3. Reverter

 

3.1 Reverter

Under these Acts (and before the 1987 Act), the grant of such land was subject to reverter to the beneficiary, ie the person, people or body identified in accordance with the principles set out under 3.3.

 

  • in the case of land granted under section 2 of the School Sites Acts 1841, or section 4 of the Literary and Scientific Institutions Act 1854 at the point when the land or any part of it ceased to be used for the specified purposes; or,
  • in the case of land granted under the Places of Worship Sites Act 1873, at the point when the land or any part of it, was used for a purpose other than that specified, or, in the case of a place of worship or residence, on it ceasing to be used as such for a year at one time.

 

Under the 1987 Act, whenever a reverting event occurs, or has occurred, the land ceases / ceased to be held on the original charitable trusts, and becomes held on trust for the beneficiary, ie the revertee under the Relevant Acts, unless the revertee has been dispossessed for the statutory period before the 1987 Act came into force, (see OG 27 B1 section 3). Unless the beneficiary is a charity, this trust will be non-charitable. If it is non-charitable, we have no jurisdiction over the trust until we have established a Scheme under the Reverter of Sites Act 1987. See OG 27 C3 for a flowchart illustrating the steps that have to have taken place before we make a Scheme, and OG 27 C4 for a flowchart to illustrate the process of making the Scheme.

 

3.2 Partial reverter

It sometimes happens that only part of a site ceases to be used. For example, a teacher’s house may no longer be required. We do not accept the view that reverter of part of the site triggers reverter of the whole site. We will therefore, consider an application for a Scheme in respect of just that part of the site which has stopped being used for the specified purposes. See OG 27 B1 section 1.3.

  

lawyer_referThis issue has not been definitively determined by the Courts. All such cases should be referred to a lawyer.

 

3.3 Identity of revertee

The School Sites Act 1841 (ss.2 and 3) and the Literary and Scientific Institutes Act 1854 (s4) provided that land should revert to and become a portion of the estate, manor (in the case of waste or common land) or duchy from which it was granted.

 

The Places of Worship Sites Act 1873 provided that land should revert to and become a portion of the lands from which it was severed.

 

When reverter occurs, the trustees of the land have to identify the revertees. It is not our function. Our role is limited to making a Scheme to re-establish the charity once:

 

  • the proper procedures have been carried out by the trustees; and,
  • the proper evidence has been put to us in the form of the statutory declaration required under s2(7) of the 1987 Act. See OG 27 B2, section 1.3.

 

The 1987 Act does not alter the identity of the revertees, nor does it assist in identifying who they are.  It did however, change the basis on which the trustees hold the land when reverter occurs. As a result, when the reverting event occurs, the trustees hold the land on a trust of land. The trust is for the benefit of those who are entitled to the land under the reverter provisions of the relevant legislation and who are referred to as ‘beneficiaries’. If the beneficiaries cannot be found, or if the beneficiaries renounce their claims, the trustees can apply under the 1987 Act for a Scheme to return the land to charitable uses.

Two recent cases have clarified the basis for identifying the beneficiaries, at least for grants under s2 of the School Sites Act 1841. These are Fraser v Canterbury Diocesan Board of Finance [2001] ch 669 (which disapproved Marchant v Onslow [1994] 2 All ER 707) and Bath and Wells Diocesan Board of Finance v Jenkinson [2002] 4 All ER 245. The beneficiaries are to be traced on the hypothesis that the land had never been conveyed by the original owner. If, as will usually be the case, the original owner has died, this will mean looking at how the land has devolved subsequently. This may be a complicated process, but it is a matter for the trustees, not for us.

 

3.4 No reverter under the Relevant Acts

It should be noted that not all land granted under the Relevant Acts is subject to reverter.

The following have never been subject to reverter:

land held for public, ecclesiastical, parochial, charitable or other purposes by corporations, or individual trustees or officers, and granted for the purposes of s6 of the Schools Sites Act 1841, or s6 of the Literary and Scientific Institutions Act 1854; and,

  • land granted as a site (of up to five acres) for school buildings, associated boarding houses and staff residencies in connection with the education and instruction of teachers of elementary schools for the poor, under s4 of the Schools Sites Act 1849.
  • the site of a school which the trustees have acquired to replace wholly the site granted under s2 of the SSA 1841.

A2 The provisions of the 1987 Act.

 

3.5 Reverter removed by Order under the Education Acts

lawyer_referUnder the power given by s86(2) of the Education Act 1944 the Minister of Education was able to remove Reverter by making an Order.  This power continued to be used until 1996 when the s554 Order procedure was introduced.  Where we are considering a case that appears to involve Reverter we should check the general Board of Education Schemes archive to establish whether or not a s86(2) Order was made in respect of the particular property.

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OG 27 A2 The provisions of the 1987 Act 19 August 2014 

1. Relevance of the 1987 Act

 

The 1987 Act, which came into force on 17 August 1987, amends the law where:

 

  • the land has been conveyed to trustees under one of the Relevant Acts – see OG 27 A1; and
  • under that Act, the grant of land is subject to a statutory right of reverter (ie, in specified circumstances, ownership of the land reverts to the beneficiary who is the person, people or body identified in accordance with the principles set out in OG 27 A1)

 

By virtue of the 1987 Act:

 

  • where the land, or part of the land, ceases, or has ceased for a period to be used for the particular purpose for which it was granted:
  • the land no longer automatically reverts;

instead,

  • the trustees hold the land on a trust of land for the benefit of the person, people or body who would have been the revertee (the beneficiary), had the 1987 Act not been passed. This will be a non-charitable trust, unless the beneficiary is a charity.

 

In cases where:

 

  • the beneficiary consents; or,
  • no beneficiary can be traced: or,
  • there is no beneficiary, because the beneficiary is statute-barred,

 

we may, on the application of the trustees, establish a Scheme. Such a Scheme would:

 

  • extinguish the rights of any beneficiary, including a beneficiary who may be identified in the future,
  • provide appropriate charitable trusts on which the property is held (see section 2.2 of OG 27 B2).

 

Where former school premises were used for the purposes of a school connected with a particular denomination, we shall only be concerned if the Secretary of State for Education and Skills will not be making an order under s554 of the Education Act 1996 (see OG 27 B2)

 

The possible relevance of the 1987 Act must be borne in mind, whether or not it is raised by the trustees, whenever:

 

  • we learn that land or buildings may have been granted under one of the relevant Acts and has ceased, or is likely to cease, to be used for the purpose for which it was granted (see OG 27 A1); or
  • it comes to light that land vested in the Official Custodian was originally granted under one of the relevant Acts, whether or not it is still being used (see OG 27 B3).

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2 Provisions of the 1987 Act

 

2.1 Definitions

 

Certain words or phrases are unique to the 1987 Act, and may have meanings unlike those found in a general dictionary:

 

  • beneficiary means the person, people or body who stand(s) to benefit under the trust of land created by s1 of the 1987 Act, ie, the person, people or body who would have been the revertee(s) had the 1987 Act not been passed.
  • relevant Acts for the purposes of the 1987 Act are the School Sites Acts, the Literary and Scientific Institutions Act 1854, and the Places of Worship Sites Act 1873.
  • revertee(s) are the person, people or body to whom land conveyed under one or other of the purposes of the Relevant Acts reverts, that is, the person etc. who become the beneficiary under the trust of land to which the property originally given is subject.
  • the reverting event occurs when land given for one or other of the purposes of the Relevant Acts ceases to be used for the purposes for which it was given. The reverting event changes the nature of the trust of land to which the property is subject, and the trust of land becomes one in favour of the beneficiary.
  • where a claim by a beneficiary is statute-barred, it means that someone other than the beneficiary has treated the land which belongs to the beneficiary on the occurrence of the reverting event as if it had belonged to that other person. Where this has happened for more than 12 years, the beneficiary’s claim to the land normally lapses and the other person acquires ownership.

 

2.2 Trust of land

 

The 1987 Act provides that on the occurrence of the reverting event, the nature of the trusts attached to the land changes (See OG 27 A1):

 

  • from a charitable trust for whichever of the purposes in the relevant Acts was declared in the governing document;
  • to a trust of land in favour of the beneficiary. This trust will be non-charitable unless the beneficiary is a charity.

 

The provision of the Act is retrospective in that, subject to s1(4), it is deemed always to have had effect in place of the reverter provisions of the relevant Acts. The Act does not, however, affect anything validly done before its commencement.

 

The trustees, that is, the persons in whom the land was validly vested immediately before the reverting event will have the full powers of trustees of land. That means that for the purpose of exercising their functions as trustees, they have in relation to the land subject to the trust, all the powers of an absolute owner – s6(1) of the 1996 Act.

 

So, trustees are, for example, able to sell, or lease or otherwise manage the land, pending the establishment of a Scheme under the 1987 Act, or the execution of the trust of land in favour of the beneficiary, as the case may be. If the beneficiary is a charity, the powers to dispose of the land are subject to the requirements of Part 7 of the Charities Act 2011.

 

2.3 Land vested in minister and churchwardens

 

In any case where, immediately before reverter would have occurred but for the 1987 Act, the land was vested in any persons in their capacity as the minister (or rector, vicar or perpetual curate) and churchwardens (or chapel wardens) of any parish (including a parish of the Church in Wales), they, and if relevant, their successors, should be treated as trustees of the new trust of land.

 

Caseworkers should take legal advice where there are concerns over the validity of the ex officio trustees.

 

2.4 Reverter occurred pre 17 August 1975

 

If the revertee was statute-barred when the 1987 Act came into force on 17 August 1987, the Act does not revive their title. Generally, this is likely to affect cases where reverter occurred before 17 August 1975, that is, twelve years before the 1987 Act came into force. However, the trustees still need to be authorised under the Education Act 1996, or by Scheme under the 1987 Act, to use for charitable purposes the property, subject to the trust of land (or apply the proceeds of a disposal of the land for such purposes).

  lawyer_refer

Legal Services should be consulted where it is contended that a beneficiary has not been statute-barred even though the reverting event occurred before 17 August 1975.

 

There are cases where Schemes were made before the 1987 Act came into force, in respect of land subject to reverter, on the basis that trustees had established a good title by adverse possession, for example, Re Rowhook Mission Hall [1984] 3 All ER 179. Such Schemes should be regarded as fully valid and effective, unless a challenge is made. Any such challenge should be referred to Legal Services for advice.

 

2.5 Our power to establish a Scheme

 

We have the power to make a Scheme in any case of reverter arising under the relevant Acts even where the property was not held on charitable trusts before the relevant cessation of use (s2 of the 1987 Act).

 

Provided that:

 

  • the steps specified in the 1987 Act have been taken by the trustees of the new trust of land to trace the beneficiary;
  • these steps have either failed, or the beneficiary has consented to such a Scheme, or there is no beneficiary; and
  • we have received a suitable statutory declaration.
  • in the case of former schools held for a religious denomination, the DfES has confirmed that it will not be including the property in an Order under s554 of the Education Act 1996.

 

We are able, on the application of the trustees, to establish a Scheme which:

 

  • extinguishes the rights of the beneficiary;
  • provides charitable trusts for the property; and
  • may include any provision which we would include in a Scheme or Order established under the 2011 Act.

 

Section 2(3A) of the 1987 Act provides that in deciding what new charitable trusts are appropriate, we must have regard to:

 

  • the desirability of securing that the property is held for charitable purposes which are close to the original purposes, whether charitable or not, for which the trustees held the land before the reverting event; and
  • the need for the new purposes to be capable of having significant social or economic effect.

 

Section 2(3B) of the 1987 Act (as amended) preserves our discretion, in determining the character of the original purposes, to give greater emphasis to the class of people or the locality that benefited from those purposes than to the nature of the benefit.

 

The new wording is slightly more directive than the original wording of the 1987 Act, adding reference to social and economic effect, which is similar to the amended provisions of section 67 of the 2011 Act. The new wording widens the range of considerations that the Commission can take account of in deciding on a suitable amendment of a charity’s objects and a similar intention appears to underpin this amendment. We do not anticipate there being any difference in practice between ensuring that new purposes are capable of having significant social or economic effect (1987 Act as amended) and ensuring that new purposes are suitable and effective in the light of current social and economic circumstances (2011 Act as amended).

 

Our power to amend objects under the 1987 Act still appears wider than that under the 2011 Act as we retain the additional discretion in determining the character of the former purposes to place greater emphasis on the definition of the beneficiary group or the area of benefit than on the nature of the benefit.

 

There is not provision in the 1987 Act for us to make a Scheme of our own motion, but neither is there any obligation placed on trustees by the Act to apply for a Scheme (or an Order under s554 of the Education Act 1996). See OG 27 B4.

 

2.6 Protection of the rights of beneficiaries

 

The 1987 Act protects the rights of any beneficiary of the trust of land by:

 

  • providing a beneficiary with a chance to object to the making of any Scheme which might remove their claims to the land (or sale proceeds). This is done by laying down requirements for the publication and content of notices regarding the circumstances in which the new trust of land in favour of the beneficiary arose, and the intention to apply for the establishment of the Scheme (s3(1) and (2));
  • imposing a duty on the trustees to consider other steps to trace the beneficiary (s3(1)(e);
  • imposing a duty on us to give public notice of the proposals to establish a Scheme and to take into consideration any representations made as a result of the publicity(ss2(5)(c) and (d);
  • providing that a s2 Scheme secures, for five years, the right of a person who would have been a beneficiary under the trust, but for the Scheme, to claim an amount equal to the value of their rights at the time of their extinguishment (s2(4)).
  • prohibiting us from establishing a Scheme where:
    • the trustees have not fulfilled the requirements of ss3(1) and 3(2) of the 1987 Act where applicable (see above); or
    • there is a valid or outstanding claim from a beneficiary of the trust (and the beneficiary has not consented to the establishment of the Scheme).

 

None of the requirements of s3 apply where:

 

  • the trust is treated as having arisen before the commencement of the Act.

 

These provisions are explained in more detail in OG 27 B2. There is a right of appeal against the Order establishing the Scheme.

 

2.7 Use of capital

 

The trustees of the new trust of land may use capital money for the purposes of any provision of the 1987 Act (s4(5)). However, there are Capital Gains tax implications if the revertee is not immediately identified as a charity, and more than 6 years elapse from the occurrence of the reverting event before a Scheme under the 1987 Act is made. See OG 27 D1.

 

2.8 Sale or exchange of land

 

With certain restrictions, s14 of the School Sites Act 1841 empowers trustees:

 

  • to sell or exchange land acquired under that Act for a more convenient or eligible site; and
  • to apply any money received in the course of the sale or exchange for the purchase of another site or in the improvement of other premises to be used for the purposes of the trust.

 

This means that trustees can acquire a school on a new site in place of a site which was given under s2 of the School Sites Act without triggering reverter. However, this power can only be used if there is a genuine intention to provide a replacement school. See also OG 27 B4.

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OG27 B1 Application of Policy 19 August 2014

 

1. Identification of land affected

 

1.1 Circumstances under which the Act applies

 

In deciding whether or not a case should be dealt with under the 1987 Act, it must first be established:

 

Whether the original grant of land was made under one of the Relevant Acts (see OG 27 A1, section 2); and, if so,

Whether, in the case of land granted under the School Sites Acts, it was, in fact, subject to reverter (land granted under s.6 of the School Sites Act 1841, under s.4 of the School Sites Act 1849, or under s.6 of the Literary and Scientific Institutions Act 1854 was not – see OG 27 A1, section 3.4).

 

The majority of cases identified are likely to involve property sold or gifted under the provisions of s.2 of the School Sites Act 1841, that is, the site and the buildings or proceeds of sale of a closed school. However, the possible relevance of the 1987 Act should be considered whenever we learn that land or buildings, held for purposes and in circumstances where it may be liable to revert under one of the Relevant Acts, ceases (or is likely to cease) to be used for the purposes for which it was granted. (This includes any case where the trustees propose to amend the area of benefit of the charity. Any amendment to the area of benefit would mean that the property would no longer be held for its original purposes so this risks triggering reverter). This should be done whether or not the trustees themselves raise the question.

 

It needs to be borne in mind that there will be many cases where land conveyed under one of the relevant Acts will belong to an unregistered charity. These will often, but not always, involve the premises of voluntary or foundation schools.

 

It is particularly important that such land is identified when it is vested in the Official Custodian (see OG 27 B3).

 

1.2 Disputed cessation of use

 

Where land has ceased to be used for the particular charitable purpose for which it was granted, but there is a dispute over exactly when cessation took place, it is not a matter on which we can make a judgement. The law here has been clarified by a House of Lords decision, overruling the Court of Appeal in Fraser v Canterbury Diocesan Board of Finance [2005] UKHL 65. The Lords found that the trustees were still providing  ‘for the education of poor persons ‘ (the first of the statutory purposes contained in section 2 of the Schools Sites Act 1841) and consequently that there had been no reverter prior to the time of the school’s closure in 1995 irrespective of whether the trustees were also educating middle class children and those from outside the ecclesiastical district in which the school was located.

 

The decision also clarifies the decision in the case of Attorney General v Shadwell [1910] 1 Ch 92. If the premises are no longer used for the purposes contemplated in the grant, then the reverting event occurs. The fact that the premises continued thereafter to be used for some other specified statutory purpose contemplated by the legislation in question but not included in the specific Trust Deed will not prevent this. For example, if a Trust was established under section 2 for the sole purpose of providing a school for the education of poor persons the fact that the site continued to be used as a Sunday School that provided education for poor persons in  ‘religious and useful knowledge ‘ (another of the statutory purposes contained in section 2) following the closure of the school would not be sufficient to prevent the reverting event taking place if that Sunday school use did not form part of the original trusts.

 

We should however, continue to advise trustees who find themselves in such a situation that we cannot come to a conclusion about when cessation of use actually happened. That is a matter for the trustees, but they should consult their own legal advisers.

 

1.3 Partial cessation of use

 

We can consider an application for a Scheme in respect of part of a site, although such cases should be treated with care. We may need to see plans of the site, so that we can clearly identify what land is no longer used for the specified purpose, and is, therefore, to be schemed. For example, where a school has decreased in size, or a site consists of two schools, it may be necessary to enquire about the dates on which individual buildings ceased to be used for the school purposes.

  

lawyer_referIf trustees indicate that they are prepared to agree a claim by a beneficiary that the whole site is held on the new trust of land where only part of the site has ceased to be used, Legal Services should be consulted.

 

lawyer_referAlthough, generally, land must have ceased to be used for the specific purpose entirely, some very occasional or limited use may sometimes be disregarded as being insignificant. Advice should be sought from Legal Services at a very early stage if this appears to be the case.

  

lawyer_referEach of the relevant Acts includes a form according to which (or as nearly as possible) the grant of land should be made. However there will be cases where this form has not been used and where no reference to the enactments has been made in the trust deed. Where it is not clear under what terms the land has been settled, the facts should be summarised and the file referred to Legal Services for advice.

 

1.4 Other factors to take into account

 

Having considered the relevance of the 1987 Act, the following will need to be established if we are asked to make a Scheme:

 

  • whether the cessation of use is such that the terms of the original Act under which the land was originally given provide that reverter arises (see OG 27 A1, section 3.1). In such cases, the trust for land will arise under s.1 of the 1987 Act and the trustees will need to establish if the beneficiary can be identified.
  • whether the land is vested in the Official Custodian (see OG 27 B3);
  • whether there is a possibility that an Order may be made under s.554 of the Education Act (see OG 27 B4).

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2. Beneficiaries of the trust

 

2.1 Beneficiaries of the trust identified

 

Where land conveyed under one of the Relevant Acts has already become subject to a new trust of land in favour of a beneficiary under the 1987 Act, no action is required by us if the beneficiary of the trust can be identified and does not waive their rights. The trust is usually non-charitable, and as such, outside our jurisdiction.

 

2.2 Beneficiaries of trust not traced or waiving their rights

 

The trustees may apply to us to establish a Scheme where:

 

  • the land was conveyed under one of the Relevant Acts; and
  • has become subject to a new trust of land under the 1987 Act; and
  • the beneficiary cannot be identified and traced, or they have waived their rights, or there is no beneficiary; and
  • in the case of a former school for a religious denomination conveyed under s2 of the School Sites Act 1841, the DfES has indicated that it will not include the property in an Order under s.554 of the Education Act 1996.

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3. Interest of revertee statute-barred prior to commencement of the 1987 Act

 

3.1 Rights of revertee not revived

 

Where the interests of a revertee were statute-barred prior to the commencement of the 1987 Act, they are not revived by the 1987 Act, nor will the revertee have rights in relation to any rents or profits received or breach of trust committed before the commencement of the Act. This can affect only those cases where reverter was triggered before 17 August 1975. (See s.1(4) of the 1987 Act).

 

3.2 Terms on which land is held

 

In these circumstances, there are difficulties as to the proper interpretation of the legislation. Following Habermehl & others v Attorney-General & others [1996] EGCS 148, which appears to provide a broadly similar result to that suggested in re Ingleton [1956] 1 Ch.585, it appears to be that the trustees hold the property on the original charitable trusts , and are able to revive the charitable interest by seeking the establishment of a Scheme under the 1987 Act. They have no authority to use the land for charitable purposes unless and until a Scheme is made under the 1987 Act. This uncertainty gives rise to practical difficulties where the trustees do not apply either to us for a Scheme under s2 of the 1987 Act, or to the Secretary of State for an Order under s.554 of the Education Act 1996. Any refusal on the part of trustees to apply either for a Scheme under the 1987 Act or for an Order under the Education Act 1996 should be referred to Legal Services.

 

In particular, because it is unclear whether or not the trustees hold the land on charitable trusts until a Scheme under the 1987 Act is established, it cannot be clear whether or not they should follow the procedures laid down in Part 5 of the Charities Act 2011 relating to the sale or mortgaging of land held on charitable trusts. The safer course may be for trustees to act on the assumption that the land is held on such trusts. In the relatively uncommon cases where such a course of action would necessitate obtaining an Order from us, we are prepared to consider making an Order  ‘tam valeat ‘ (that is, to give our authority if and in so far as it is needed). Such an Order will authorise the sale of the land and cover the situation should it be finally determined that a charitable trust does exist.

lawyer_referAny such case should be referred to Legal Services.

 

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OG27 B2 Making a Scheme under s2 of the 1987 Act 19 August 2014

1. Making a Scheme

 

1.1 Conditions to be satisfied

 

A Scheme under s2 of the 1987 Act may be established only:

 

  • on the application of the trustees of the new trust of land;
  • on satisfaction by the trustees and ourselves of the conditions laid down in the Act (see section 1.2).

 

It is recommended that the trustees apply for a Scheme as quickly as possible. In the case of former schools for a religious denomination originally created under s2 of the School Sites Act 1841, the trustees will need to confirm whether the DfES will be including the property in an Order under s.554 of the Education Act 1996. See OG 27 B4. In these cases we can only make a Scheme under the 1987 Act where the DfES has decided not to proceed with an Order.

 

Unlike the Schemes we make under the Charities Act 2011,there is no provision for us to make a Scheme under s2 of the 1987 Act of our own motion; if the trustees refuse to make an application then the Scheme cannot go ahead.

lawyer_referIf this is the case, then advice should be sought from Legal Services.

 

NOTE: Where there are no properly appointed trustees to apply for a Scheme, and the revertee is not a charity, we cannot make a Scheme to appoint trustees. This is because the trust of land is non-charitable and, consequently, does not fall under our jurisdiction except as provided in section 2 of the 1987 Act. In such a case, it is likely that the only way trustees can be appointed is by the Court under its inherent jurisdiction over trusts and trustees. The Commission cannot apply to the Court to appoint trustees; an application must be made by someone with an interest in the property.

lawyer_referWhere you come across a case where there are no properly appointed trustees, always seek advice from Legal Services.

 

1.2 Public notice of proposal to apply for a Scheme

 

Specific requirements as to the publicity to be given to the trustees’ proposal to apply for a Scheme are laid down in s3 of the 1987 Act.

 

This section states that the trustees must publish notices notifying their intention to apply for a Scheme unless

  • the new trust of land is treated as having arisen before the commencement of the Act (that is, where reverter occurred before 17 August 1987) and
  • more than twelve years have elapsed since that time.

As more than 12 years have passed since the Act came into force, where we are approached to make a Scheme where reverter was triggered before 17 August 1987 the second bullet point will always be fulfilled so there will be no need to give public notice.   

[If the exact date that reverter occurred is not known, but it is possible that reverter occurred after the commencement of the 1987 Act, we should recommend that trustees give public notice of the intention to apply for a Scheme. If the exact date of reverter is unknown, but it is clear that this occurred before the commencement of the 1987 Act, it is not necessary to give public notice of the intention to apply for a Scheme for the reasosn given above.]

 

Section 3 of the 1987 Act states that notice of the intention to apply for a Scheme must be posted:

 

  • in two national newspapers;
  • in a local newspaper circulating in the location of the relevant land; and
  • in a prominent position on the relevant land so that, as far as practicable, it can be easily read without going on the land. This notice must be in position for not less than 21 days during the first month of the period laid down for any beneficiary to give notice of his claims, except that, if the land is not under the control of the trustees, and it is not reasonably practicable for them to display such a notice, they need not do so.

 

In addition, the trustees must:

 

  • have considered what other steps could be taken to trace any beneficiary and to inform them of the application for a Scheme; and
  • have taken such of those steps as they consider reasonably practicable.

Each of the notices described above must:

 

  • set out the circumstances that have resulted in the new trust of land arising;
  • state that an application is to be made for the establishment of a Scheme with respect to the trust property;
  • specify a period for the notification to the trustees of claims by any beneficiary which must end not less than three months after the date of publication of the last of the notices; and
  • contain a warning to every beneficiary that, if they wish to oppose the extinguishment of their rights, they must give notice of their claim to the trustees as specified in the notice.

 

The trustees are responsible for ensuring that the notice is technically accurate and sufficient. Any request by trustees for us to approve a particular notice should be declined. We can, however, offer a form of wording which may assist them – see OG 27 C1. Caseworkers should present this as an example only. We cannot give any guarantee for technical sufficiency, which is for the trustees to establish with their legal advisers.

 

Any representation from persons claiming to be a beneficiary, received by the trustees as a result of the publicity must be dealt with by them, in consultation with their legal advisers if necessary, before an application for a Scheme can be made.

 

1.3 Statutory declaration

 

Having:

 

  • taken action as set out above; and
  • the period specified for any beneficiary to notify claims having passed;

 

Or

 

  • having decided that such action is not required;

 

The trustees must provide a statutory declaration to the effect that:

 

  • they have complied with the requirements of s3 of the 1987 Act (that is, they have taken the action set out in section 1.2 and the period within which claims by any beneficiary may be notified to the trustees has passed); or
  • they do not have to comply with s3 of the 1987 Act as reverter was triggered before 17 August 1987;

 

and:

 

  • there are no valid or outstanding claims by any person to be a beneficiary of the trust; or
  • if there are any such claims, each actual or potential beneficiary has consented to the establishment of the Scheme.

 

The trustees are responsible for ensuring that the form of statutory declaration is technically accurate and sufficient. Any request for us to approve the form should be declined. We have a form of words – see OG 27 C2 - which may assist trustees. Caseworkers should present it as an example only. Trustees should establish its technical sufficiency with their legal advisors.

 

For the purposes of making the statutory declaration referred to in s2(7) of the 1987 Act, the trustees need consider only the claims of beneficiaries of whom they are aware at the conclusion of the process in s3 of the Act.  We can only make a Scheme where, if a beneficiary is identified, they have formally renounced their claim or the court has rejected their claim. We cannot make a Scheme where a beneficiary is identified and they refuse to renounce their claim.

 

The options available to the trustees in relation to claimants include:

 

  • accept the claim if only one claim is made, and the trustees are satisfied as to its validity;
  • persuade all the claimant(s) of whom the trustees are aware to withdraw their claims and to consent to the making of the Scheme possibly on terms that payments are made to the claimant(s), but the trustees would then need to be satisfied that no other claim could subsequently be upheld during the 5 year period referred to in s2(4) of the 1987 Act;
  • suggest that the claimant(s) apply to court to have the validity of their claims tested – claimants may be reluctant to take the risk of having to pay the costs;
  • the trustees could apply to court to test the validity of the claim or claims which have been made – this would involve the trustees in some expense, but the Court would normally make provision for the expenses of the application to be paid out of the trust property; or
  • the trustees could sell the trust property and pay the proceeds of sale into court – the trustees would be discharged from the trusts and they would leave it to the claimant to prove his or her title to the Court.

 

1.4 Receipt of application

 

An application for a Scheme may only be considered by us if it is accompanied by a statutory declaration. This may be taken as conclusive evidence that its contents are true unless there are clear indications that it is not. 

lawyer_referFor example, it is the duty of the trustees to deal effectively with anyone who claims to be a beneficiary of the new trust of land. If the trustees make a statutory declaration that there are no claims outstanding, we should accept this, unless we have good reason to believe that the statutory declaration is false. If we are notified of a claim, the case should be referred to Legal Services for advice on the question whether we should still rely on the statutory declaration that there is no outstanding claim.

 

The application should be made under s2 of the 1987 Act – it is not appropriate to use the form of application for a Scheme under the 2011 Act.

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2. Contents of the Scheme

 

2.1 Character of new trusts

 

The Scheme may include other provisions deemed necessary or desirable for the administration of the charity, but its prime purpose is to:

 

  • extinguish the rights of the beneficiary; and
  • provide new charitable trusts for the property.

 

Section 2 of the 1987 Act directs that in deciding what new charitable trusts are appropriate, we must have regard to:

 

  • the desirability of securing that the property is held for charitable purposes which are close to the original purposes, whether charitable or not, for which the trustees held the land before the reverting event; and
  • the need for the new purposes to be capable of having significant social or economic effect.

 

In determining the character of the original purposes, we have discretion to give greater emphasis to the class of people or the locality that benefited from those purposes than to the nature of the benefit.

 

Our discretion, in determining what is similar to the original purposes, to focus on the area of benefit or the beneficiary class rather than the type of benefit provided, together with the new requirement to ensure that the new purposes are capable of significant social or economic effect, gives us great flexibility in deciding on new charitable purposes. For example, in appropriate cases, former school premises that are no longer needed for educational purposes may be settled on charitable trusts for use as a community centre for the benefit of the same locality.

 

The reverted premises would typically have been permanent endowment. In cases where they are to be sold rather than used for a new purpose, it will usually be appropriate to direct in the Scheme that the proceeds of sale shall be held on trust for investment, the income being made applicable for suitable charitable purposes in the area.

 

The direction of the trust for investment reflects the intention of the original founder of the charity to establish a charity with a degree of permanence in the services which it provides to the public.

 

But there is no strict rule which requires the direction of a trust for investment in all cases; considerations of social utility are also relevant. The trustees may well be able to convince us that the expenditure of the proceeds of sale on, for example, the development of a local educational or recreational amenity is socially more useful than the direction of a trust for the investment of the proceeds of sale.

  

lawyer_referYou should take legal advice before agreeing not to direct a trust for the investment of the proceeds of sale.

 

The amount of the proceeds of sale is, of course, relevant to the decision on what is their most socially useful cy-près application. Section 281 of the 2011 Act contains wide powers for charities to dispose of investment permanent endowment. There would be little point in insisting within the Scheme that proceeds of sale should be invested in cases where the trustees would immediately be in a position to use s281. For further details of these provisions see OG 531-1. Legal advice need not be taken where we are proposing not to direct a trust for investment in such a case.

 

2.2 Extinguishing rights

 

Provision must be made in the Scheme to protect, for a period, the rights of any beneficiary who has not consented to its establishment. In the event of such a person notifying a claim to the trustees within 5 years of the date of the establishment of the Scheme, they must be paid an amount equal to the value of their rights at the time of the extinguishment (ie the date of the Scheme). This provision for settling claims should be included unless it is clear that the beneficiary’s claim is statute-barred.

 

The most effective, and therefore the preferred method of providing against a successful claim from a beneficiary, is insurance. Trustees should be encouraged to obtain suitable cover. However, if insurance is not available or practical, for whatever reason, the requirements of the Act may be satisfied by other means; see section 3.

 

2.3 Model clauses

 

Model clauses for inclusion in the Scheme comprise:

 

  • an ‘extinguishment of rights’ clause to extinguish the rights of any beneficiary; for example:

‘the rights of the beneficiary or beneficiaries under the trust arising in relation to the property under section 1 of the Act are extinguished by this Scheme’.

 

  • an ‘administration’ clause (which may vary from case to case);
  • a ‘provision for claims’ clause to protect the rights of any beneficiaries and to ensure that the trustees make adequate provision for any payment required; for example:

‘If any person:

(1) but for the making of this Scheme, would be a beneficiary under the trust arising in relation to the property under section 1 of the Act; and

(2) has not consented to the establishment of this Scheme; and

(3) notifies his or her claim to the trustees within five years after the date of this Scheme;

the trustees must pay to him or her an amount equal to his or her rights under such a trust at the date of this Scheme’.

  • alternative clauses covering:
    • ‘use of property’
    • ‘purchase of insurance’ – ‘the trustees must (out of the property of the charity) effect a suitable policy of insurance to secure the payment of any such sum required to be made as specified in the ‘provision of claims’ clause above’ (if appropriate – see section 3);
    • ‘sale’ and ‘proceeds of sale’ (these should be included only where the trustees make a case for being granted a power of sale);
    • ‘expenses of management’; and
    • ‘application of income’.

 

We can include any other provisions which we could offer if the Scheme were being made under the Charities Act 2011. The Scheme must be made under the Reverter of Sites Act 1987, and it should refer to ‘property’ or ‘former charity’ rather than charity in the shoulder note and title. The form of title is likely to be a variant of:

 

  • ‘In the matter of the property consisting of [the proceeds of the sale of] the former [#Church of England School/School House at #] in the County of # [representing part of the property] comprised in a conveyance dated #; and
  • In the matter of the Reverter of Sites Act 1987’; and

 

The introductory clause should be amended to:

 

‘THE CHARITY COMMISSION FOR ENGLAND AND WALES Under the power given in the Reverter of Sites Act 1987 orders that from today, the [day - month - year] the following Scheme will govern the above-mentioned [property] [former charity]:-’.

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3. Insurance against claims

 

3.1 Our duty

 

Trustees may contend that they are unable to obtain insurance against a successful claim from a beneficiary.

 

The Order is required under s2(4) of the 1987 Act to secure that beneficiaries are paid the value of their rights at the time of their extinguishment, namely, the date of the Scheme.

 

We usually achieve this by requiring the trustees to purchase suitable insurance. But, there are, in exceptional circumstances, other options. Section 3.3 sets out some options to consider if the trustees cannot be persuaded to buy such insurance.

 

3.2 Property to be sold

 

If at the date of the Scheme the trustees have already sold the property under their 1996 Act powers, and the trustees are unwilling to accept an insurance direction, the Scheme should direct that the net proceeds of sale, and any income derived from the investment of the proceeds of sale up to the date of the Scheme, should be set aside by the trustees for the 5 year period to meet any possible claim.

 

If the intention at the date of the Scheme is to sell the property, and the trustees are unwilling to accept an insurance direction, the Scheme should contain a direction for a sale so soon as is reasonably practicable, and a direction for the net proceeds of sale, together with any income obtained from the use of the property before sale, to be retained for the 5 year period to meet any possible claim.

 

Trustees should be aware that unless the revertee is immediately identified as a charity, they may be liable for Capital Gains Tax. See OG 27 D1.

 

3.3 Property to be retained

  

lawyer_referIf neither the insurance nor the set aside option is practicable, an alternative may be to direct that any possible liability of the beneficiary should be secured by a guarantee, eg from a local authority. This option will involve an assessment of the credit of the proposed guarantor. Another option, if the property is to be retained, is to direct the trustees to create a charge over the property to secure the possible liability, but there is a risk here that the eventual creation of a charge over the other assets of the charity as well. These proposals, or any other proposal, for the form of the direction to secure the possible liability to the beneficiary should be referred to Legal Services.

 

If Legal Services are satisfied that the trustees’ proposals are adequate, approval of the trustees’ proposals should be given by letter signed by an officer of at least Pay Band 5 level who has been appointed an Authorised Officer. This must be done before a Scheme is made.

 

Where the land is appropriated under our Scheme for functional purposes, a power of sale should be granted to the trustees only if they can:

 

  • make out a case for it; and
  • provide a satisfactory way of ensuring that there will be sufficient funds to meet any claim.

If a power of sale is granted, and the land is sold, we may need:

 

  • to ensure that the trustees continue to make suitable provision for any claim within 5 years of the making of the Scheme; and
  • to consider if any new trusts are needed.

 

3.4 Inadequate directions in Scheme

 

If a Scheme does not contain adequate directions to ensure that any claim may be paid, we may have failed to carry out our statutory duty. If, in these circumstances, the charity did not have enough money to meet a beneficiary’s claim, we could be liable for the shortfall. If the value of the charity’s property or investments had fallen sharply, this could be substantial. Any claim for compensation (‘financial redress’) will need to be dealt with in accordance with our normal procedures for this.

 

3.5 Trustees fail to comply with directions

 

If the directions in the Scheme are adequate, but the trustees fail to comply with them, the trustees will be in breach of trust. They will be personally liable to the beneficiary for any loss which this causes.

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4. Public notice before and after making a Scheme

 

Just as the trustees have a statutory duty to publicise their intention to apply to us for a Scheme (see section 1.2), we also have a statutory duty to give notice of what we intend to include in a Scheme, and if we do make one, notice that we have done so.

 

4.1 Our proposals

 

Public notice of our proposals must be given as laid down in s2(5)(c) of the 1987 Act. Any such notice must refer to the 1987 Act and not to the Charities Act 2011. This must invite representations to be made to us within a specified period ending not less than a month after the date of giving notice. Any representation received (and not withdrawn) must be taken into account by us when making the Scheme.

 

  • If, as will usually be the case, the former charity was a local one, it will generally be sufficient to ask the correspondent to display two notices for a period of one month in the locality concerned.
  • If the former charity had a wider area of benefit, or is of particular interest to the public, consideration should be given to requiring that a notice be placed also in a local newspaper.
  • If, which would be quite exceptional, the former charity had an unrestricted area of benefit and operates on a national scale, a notice should be required to be published once in a national newspaper.

 

4.2 Established Scheme

 

Public notice of the establishment of the Scheme must be given as laid down in s4(1) of the 1987 Act. Any such notice must refer to the 1987 Act and not to the Charities Act 2011. This must be in a manner considered sufficient and appropriate by us. Generally, publication by notice board only, for a period of one month, will meet both of these requirements. Only in the case of a national charity, or a charity with an extensive area of benefit, should it be necessary for the notice to be placed in a newspaper or other publication.

 

A copy of the Scheme must, for a month after the date of giving notice, be available for public inspection at our office and at some convenient place in the locality where the land is situated.

 

4.3 Right of appeal

 

There is a right of appeal to the High Court against the establishment of the Scheme by:

 

  • the Attorney-General;
  • the trustees of the trust established by the Scheme;
  • a beneficiary of, or the trustees of, the statutory trust;
  • any person interested in the purposes for which the land was held before the trust arose;
  • any two or more inhabitants of the locality where the land is situated;
  • any other person who is or may be affected by the Scheme.

 

Any such appeal, unless made by the Attorney-General, must be made:

 

  • within the period of three months beginning with the day following the date on which the public notice of the establishment of the Scheme is given;

 

And with either:

 

  • a certificate from us that it is a proper case for appeal; or
  • if such a certificate has been refused, with the leave of the High Court.

  

lawyer_referIf you are dealing with a case which involves an appeal to the Courts against the Scheme, refer the case to Legal Services.

 

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OG27 B3 Land Vested In The Official Custodian For Charities 14 March 2012

 

1. Effect of the 1987 Act on the Official Custodian

 

If land conveyed subject to a right of reverter under the relevant Acts is vested in the Official Custodian at a time when it ceases to be used for the specific purposes for which it was granted, the effect of the 1987 Act, is that, from that date, the Official Custodian will hold the land on the new trust of land arising under s.1. Unless the beneficiary is a charity, that trust of land will be non-charitable.

 

This situation is unsatisfactory, because:

 

  • the Official Custodian’s function under s.21 of the Charities Act 2011 is to act as custodian for charities; and,
  • s.91(1) of the 2011 Act requires the Official Custodian not to exercise any powers of management and confers upon him only the powers, duties and liabilities of a custodian trustee; as a trustee of land, the Official Custodian would be expected by the beneficiary under the new trust of land to exercise powers of management.

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2. Divesting the Official Custodian of land subject to reverter

 

2.1 General principles

 

It is clearly wrong that the Official Custodian should be placed in this position, which might expose him/her to a claim by the beneficiary under the new trust of land for any loss sustained by them while the land is vested. Sections 92-95 of the 2011 Act remedies this by:

 

  • providing mechanisms for divesting the Official Custodian in cases in which he holds land which may, or has, become subject to the new trust of land; and,
  • limiting the liability of the Official Custodian to the beneficiary under that trust of land.

 

A discharging Order need not be made if we are satisfied that it is unnecessary to do so because the problems described can be avoided by other means. For instance, it would be unnecessary to make an Order if:

 

  • in a case where the new trust of land has not yet arisen, (see section 2.2), a Scheme is in the process of being made for some other reason and can be adapted so as to discharge the Official Custodian and vest the land in the trustees;
  • in a case where the new trust of land has arisen (see section 2.3), an application has been received for a Scheme under s.2 of the 1987 Act in relation to the land and therefore it is possible to secure that it will once more become subject to charitable trusts.

 

2.2 New trust of land not yet arisen

 

Under s.92, we, of our own motion, may:

 

  • at any time before a new trust of land arises under the 1987 Act:
    • make an order under s.69 of the 2011 Act discharging the Official Custodian from the trusteeship of the land: and,
    • make such vesting Orders and give such directions as appear to be necessary and expedient in consequence.

 

The Court may take similar action under s.91(3) of the 2011 Act.

 

A notice should be sent to each trustee (and to the persons in whom we propose to vest the land, if different from the trustees) informing them of our intention to make the Order (s.71).

 

When the Order has been authorised, a notice should again be sent to each trustee informing them that the Order has been made.

 

2.3 New trust of land arisen

 

Under s.93(2) of the 2011 Act, where land remains vested after a new trust of land has arisen, and action as listed in 2.2 has not been taken, the Court, or ourselves, of our motion, may:

 

  • make an Order discharging the Official Custodian from his/her trusteeship of the land; and
  • make such vesting Orders and give such directions as appear necessary and expedient in consequence (s.93(2)).

 

In addition, by virtue of s.95(1)–(3) of the 2011 Act, the Official Custodian does not take on the normal powers, duties and liabilities of a trustee. Instead, these responsibilities immediately become those of the charity trustees of the ‘charity concerned’, that is, the person or those persons who were the charity trustees of the charity immediately before the new trust of land arose. The trustees may deal with the land in the Official Custodian’s name and on his behalf as if the land was vested in them, except that they are not authorised to sell the land.

 

Because the Order is made under the special jurisdiction of sections 92-95 of the 2011 Act, the requirements of s.71 and s.89 regarding notice to the trustees and the public do not apply. Nevertheless, the trustees of the charity for which the Official custodian was holding the land immediately before the new trust of land should be informed of our intention to make an Order (as should the persons in whom we propose to vest the land, if different from the trustees), and the correspondent of the charity should be asked to check the accuracy of the Order.

 

When the Order has been authorised a notice should again be sent to each trustee notifying them that the Order has been made.

 

2.4 Vesting provision

 

Orders made under s.92 or s.93(2) should vest the land in the charity trustees of the relevant charity or the trustees of the former charity unless we (or the Court) are satisfied that it would be appropriate for it to be vested in some other person.

 

Once the vesting Order is made, the land is held by the persons specified in the Order on the new trust of land under the terms of the 1987 Act for the benefit of the person, people or body who would have been the revertees had that Act not been passed (ie the beneficiary), (s.95(4)).

 

2.5 Liability of the Official Custodian

 

Whilst the land is invested in the Official Custodian, s/he has the same degree of protection in dealing with it as is granted under paragraph 4 of Schedule 2 of the 2011 Act in relation to property held by him for charities.

 

Under sections 95(5)-(6) of the 2011 Act, s/he is not liable in respect of any loss or misapplication unless it is caused by any wilful neglect or default of his/hers, or of someone acting for him/her.

 

2.6 Future vesting

 

In order to avoid as far as possible, the difficulties described above, no land conveyed subject to a right of reverter under the Relevant Acts should be vested in the Official Custodian in future. It can be vested in a nominated custodian who is able to hold charitable and non-charitable property on trusts, e.g. a parish council, a bank, or a non-charitable company.

lawyer_referWhere there is any doubt as to the terms on which the land was conveyed, the advice of Legal Services should be sought.

 

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OG27 B4 The Education Act 1996 26 March 2001

 

1. Introduction

The Education Act 1996 consolidated various statutes concerned with educational provision, amongst them the Education Act 1973. Section 2 of the 1973 Act contained the provisions concerning reverter in relation to educational properties. Sections 554-556 of the Education Act 1996 are the direct replacements for s2 of the 1973 Act (see table), and came into force on 1 November 1996.

We do not automatically get involved in school site cases as the Secretary of State for Education has powers under the 1996 Act to determine the rights of reverter and the future use of the proceeds of sale from certain school properties. Where the Secretary of State and the Commission have concurrent jurisdiction we have jointly agreed that to avoid confusion, the first option will be for the Secretary of State to consider exercising his jurisdiction under s554 of the 1996 Act. If he chooses not to, then the Commission can consider the issue. 

New provision (1996 Act)

s554

s555

s556

Old provision (1973 Act)

s2(1)

s2(2)

s2(3)-(7

These paragraphs have themselves been amended by paragraphs 168 and 169 of Schedule 30 of the School Standards and Framework Act 1998, to take account of the restructuring of schools in the maintained sector for which that Act made provision.

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2. Orders made by the Secretary of State under Section 554

It may be that the premises of a voluntary, foundation, or a grant-maintained school connected with a particular religious denomination have ceased to be, or are likely to cease to be used as such. If this is the case, under s554 of the Education Act 1996, the Secretary of State for Education, may, in certain circumstances, by Order, make new provisions concerning the school. These will relate to the use of certain endowments held or used in connection with the provision at the school or religious education in accordance with the tenets of a particular religious denomination.

Such an Order may require or authorise the disposal of land previously liable to revert under s.2 of the School Sites Act 1841.

The 1987 Act empowers the Secretary of State, by an Order made under s554 of the Education Act 1996:

  • To extinguish any rights to which a person is or may become entitled as a beneficiary under the new trust of land arising instead of reverter, provided:
    • he is satisfied that all reasonably practicable steps to trace those persons have been taken; and
    • there is no valid or outstanding claim by a beneficiary, or, where there is such a claim, the person has consented to the Order (s5).

We should not use our jurisdiction until we have confirmation that the Secretary of State will not be making an Order under s554 of the Education Act 1996.

Trustees may apply to both the Secretary of State under s554 of the Education Act 1996, and to us under the 1987 Act for the extinguishment of the rights of any beneficiary with respect to the same trust property. If so, we may not proceed with our consideration of the application of for a Scheme unless the Secretary of State:

  • consents to the application made to us being considered before the application made to him/her; or
  • disposes of the application without extinguishing the rights of one or more beneficiaries (s5(3)).

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3. Possible Order under Section 554

3.1 Reapplication of endowments held for religious education

Normally, when a cy-près occasion arises, we make a Scheme to reapply the endowments for suitable and practical purposes as near as possible to those originally intended. So far as educational trusts associated with voluntary schools are concerned, a failure is usually brought about by the closure of the voluntary, foundation or grant-maintained school to which they relate (but Scheme action may be necessary if the school is moved to a new site).

In certain circumstances, s554 enables the Secretary of State to make fresh provision for the endowments of trusts, held or used for the provision of religious education at the closed school, in such a way that they remain for the benefit of the maintained educational sector. Since 1988 this provision has applied equally to the endowments of closed grant-maintained schools, and since 1999 also to foundation schools. The object of a s554 Order is to enable the denomination concerned to participate more effectively in the administration of state education.

An application for an Order under s554 may be made by the appropriate authority of any religious denomination or religion. Since the vast majority of applications relate to Church of England schools, this guidance assumes that an application is to be made by a Church of England Diocese (usually the Diocesan Board of Education). However, it applies equally to an application by the appropriate authority of another denomination or religion.

3.2 The requirement to make enquiries

In all cases where there is a reverter under the School Sites Act 1841, enquiries should be made to check whether the relevant diocese intends to apply for an Order to be made under s554.

Once the diocese has applied for such an Order (and they will usually do so), the Department for Education and Skills will decide whether the land is suitable for inclusion in an Order.

We would need to take further action only if all or some of the land is not included.

3.3 No obligation on trustees to apply

Under ss554-556 of the Education Act 1996 there is no statutory obligation on trustees to apply for an Order, nor is there a power granted to the Secretary of State to make Orders of his own motion. In the relatively unlikely event of the trustees refusing to apply for an Order under the 1996 Act, we cannot make a Scheme of our own motion. See OG 27 B2, section 1.1.

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OG27 C1 Model notice under s.3 of the 1987 Act 26 March 2001

 

The following is a form of wording which may assist trustees in compiling the notice. Caseworkers should present this as an example only. We cannot give any guarantee for technical sufficiency, which is for the trustees to establish in consultation with their legal advisers.

 

Notice under s.3 of the Reverter of Sites Act 1987

 

The former ............................in the County of ...........................

 

  • The Trustees of             formerly held the land specified in [Part I of ] the schedule below  under a deed dated          and made between                   .  The deed was made under the provisions of the                 Acts and settled the land upon trust for use for the purposes of              .On ceasing to be used for these purposes there was a provision for the land to revert to the original owner.
  • The land ceased to be so used and by virtue of section 1 of the Reverter of Sites Act 1987 became subject to a trust  for the persons who but for that Act would from time to time be entitled to the ownership of the land by virtue of its reverter (“the beneficiaries”)
  • [The Trustees have sold the land and now hold the property specified in Part II of the schedule below on the last-mentioned trust]
  • The Trustees propose to apply to the Charity Commission for England and Wales under section 2 of the Reverter of Sites Act 1987 for an Order establishing a Scheme with respect to the property subject to the said trust which will:
    • Extinguish the rights of the beneficiaries under the trust; and
    • Require the Trustees to hold the said property on trust for such charitable purposes as may be specified in the Order.
  • Any beneficiary under the trust who wishes to oppose the extinguishment of his/her rights should notify his/her claim in writing to the Trustees c/o .........  within three months from today.

SCHEDULE

[Part I]

[Part II]

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OG27 C2 Model statutory declaration for the purposes of s2(7) of the 1987 Act 26 March 2001

 

The following is a form of wording which may assist trustees to draw up a statutory declaration. Caseworkers should present this as an example only.  We cannot give any guarantee for technical sufficiency, which is for the trustees to establish in consultation with their technical advisers.

 

Model statutory declaration for the purposes of s2(7) of the 1987 Act

 

Charity Commission reference:

County:

Place:

Former charity:

 

We [full names] of [addresses] DO SOLEMNLY AND SINCERELY DECLARE as follows:

 

  • We are the trustees of the property described in the schedule below, and hold the property on the trusts set out in section 1 of the Reverter of Sites Act 1987. We are applying for an Order under section 2 of that Act.
  • [The requirements of section 3 of the said Act do not have to be satisfied with respect to the making of the application.]

 

Or

 

  • The requirements of section 3 of the said Act are satisfied with respect to the making of the application.]
  • [There is no claim by any person to be a beneficiary in respect of rights proposed to be extinguished by the scheme under section 2:
    • which is outstanding; or
    • which has at any time been accepted as valid by us  or by persons whose acceptance binds us; or
    • which has been upheld in proceedings which have been concluded.]

 

Or

 

  • [Consent to the establishment of a scheme under section 2 of the said Act has been given by every person whose claim to be a beneficiary in respect of rights proposed to be extinguished is outstanding or has been so accepted or is so upheld.]

 

And we make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act 1835.

 

Declared at this                     day of                                

 

Before me

 

Commissioner for Oaths/Solicitor empowered to administer oaths

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OG27 C3 Can we make a Scheme? 17 July 2012

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OG27 C4 Reverter of sites Act 1987 Process of making a Scheme  26 March 2001

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OG27 C5 Summary of cases where reverter may arise and the effects of the 1987 Act 14 March 2012 

 

School Sites Acts (1841, 1844, 1849, 1851, 1852)

Literary and Scientific Institutions Act 1854

Places of Worship Sites Act 1873

Reverter applies where land is conveyed under one of the Acts for:

Up to 1 acre* for;

• school/school master’s residence in connection with education of poor in religious and useful knowledge.

• up to two acres for chool/college/associated school masters’ residences, for religious education, or educational training of sons of yeomen,tradesmen or others & theological training of candidates for holy orders.

* under the 1849 Act, sites greater than 1 acre were brought under the ambit of the legislation, so gifts made between 1849 and 1987 of more than 1 acre were valid, and may have a reverter.

Up to 1 acre for:

•institutions for science,literature, or fine arts, adult instruction or in useful knowledge.

•public or members’ libraries or reading rooms

•public museums, art galleries, collections of natural history, mechanical and philosophical inventions, instruments or designs.

Up to 1 acre for:

• church, chapel, meeting house or place of divine worship.

• residence of a minister officiating in a place of worship within one mile of site.

• burial place.

Reverter triggered

upon cessor of use: NB if the school (voluntary controlled not  aided) is transferring to a new site, and the old site being sold, a reverter does not occur. What should happen, if LEA provide new site, is that they should convey it to the trustees, under para 7, 1st Schedule Education Act 1946, and then the proceeds of sale of the old site will be determined by the DFES as between the trustees and the LEA. If any proceeds are left to the trustees a Scheme may be required for those proceeds.

upon cessor of use after 1 year of cessor of use
Reverter did not apply

• land held for public, ecclesiastical, parochial, charitable or other purposes by corporations or individual trustees and granted under s.6 of the 1841 Act for purposes stated in s.2 of 1841 Act.

• land up to five acres for school buildings, associated boarding houses, and staff residences in connection with the education and training of teachers for elementary school for the poor (s.4 of the 1841 Act).

• if the trustees decide that they need better premises they are empowered, within limits, by s.14 of the 1841 Act to sell/ exchange the original site for a replacement site without triggering the reverter

• to a site and school and which replaces the original school and which were acquired by exchange or replacement under s.14 of the 1841 Act

N/A N/A
Effect of the 1987 Act

• Subject to 1(4) of 1841 Act, land subject to reverter now held on statutory trust for sale for benefit of beneficiary (formerly the revertee): can manage and sell the land, and reversion comprises land and/ or proceeds of sale, and/or net income from renting out land.

• resulting trust for sale is non charitable in most cases.

• the sale will not be subject to s.117 the Charities Act 2011, because of s.117(3)(a).

• If someone has obtained “adverse possession” (i.e. by occupying the land unchallenged for 12 years or more) the beneficiaries claim, and the trustees’ claim is lost, the trustees do not have a power of sale but do have power to apply for a Scheme under s.2 of 1987 Act or and Order from DfES s.554 of the Education Act 1996 to deal with proceeds of sale.

• land subject to reverter now held on statutory trust for sale for benefit of beneficiary (formerly the revertee): can manage and sell the land, and reversion comprises land and/ or proceeds of sale, and/or net income from renting out land

• resulting trust for sale is non charitable in most cases.

• the sale will not be subject to s.117 the Charities Act 2011, because of s.117(3)(a).

• If someone has obtained “adverse possession” (i.e. by occupying the land unchallenged for 12 years or more) the beneficiaries claim, and the trustees’ claim is lost, the trustees do not have a power of sale but do have power to apply for a Scheme under s.2 of 1987 Act.

• land subject to reverter now held on statutory trust for sale for benefit of beneficiary (formerly the revertee): can manage and sell the land, and reversion comprises land and/ or proceeds of sale, and/or net income from renting out land

• resulting trust for sale is non charitable in most cases.

• the sale will not be subject to s.117 the Charities Act 2011, because of s.117(3)(a).

• If someone has obtained “adverse possession” (i.e. by occupying the land unchallenged for 12 years or more) the beneficiaries claim, and the trustees’ claim is lost, the trustees do not have a power of sale but do have power to apply for a Scheme under s.2 of 1987 Act.

• If the land has been vested in the Official Custodian, and it becomes subject to a non charitable statutory trust for sale, this is unsatisfactory.  Solution is to discharge OC from acting, using powers under s.92 of the Charities Act 2011.  This is done before the statutory trust for sale arises by s.71 Order to discharge, coupled with vesting order to transfer to other trustees (usually the existing charity trustees). After the statutory trust for sale arises the court or the Commission can take the same steps to discharge the OC (s.93(2)).  In this case the persons who were charity trustees before trust for sale arose immediately obtain the full duties and responsibilities of trusteeship, except that they do not have power to sell the land until the OC is discharged.  See B3.

• If the land has been vested in the Official Custodian, and it becomes subject to a non charitable statutory trust for sale, this is unsatisfactory.  Solution is to discharge OC from acting, using powers under s.92 of the Charities Act 2011.  This is done before the statutory trust for sale arises by s.71 Order to discharge, coupled with vesting order to transfer to other trustees (usually the existing charity trustees). After the statutory trust for sale arises the court or the Commission can take the same steps to discharge the OC (s.93(2)).  In this case the persons who were charity trustees before trust for sale arose immediately obtain the full duties and responsibilities of trusteeship, except that they do not have power to sell the land until the OC is discharged.  See B3.

• If the land has been vested in the Official Custodian, and it becomes subject to a non charitable statutory trust for sale, this is unsatisfactory.  Solution is to discharge OC from acting, using powers under s.92 of the Charities Act 2011.  This is done before the statutory trust for sale arises by s.71 Order to discharge, coupled with vesting order to transfer to other trustees (usually the existing charity trustees). After the statutory trust for sale arises the court or the Commission can take the same steps to discharge the OC (s.93(2)).  In this case the persons who were charity trustees before trust for sale arose immediately obtain the full duties and responsibilities of trusteeship, except that they do not have power to sell the land until the OC is discharged.  See B3.

Appropriate circumstances in which to make a scheme under s.2 of Reverter of sites Act 1987

 

Only where an Order under s.554 of the Education Act 1996 will not be made*

• trustees have been unable to trace beneficiaries after complying with provisions of the 1987 Act (see B2) or

• beneficiaries traced but willing to give up their interest in the land.

• trustees have been unable to trace beneficiaries after complying with the provisions of the 1987 Act (see B2)

or

• beneficiaries traced but willing to give up their interest in the land

• trustees have been unable to trace beneficiaries after complying with the provisions of the 1987 Act (see B2)

 or

• beneficiaries traced but willing to give up their interest in the land.

*FOR SCHOOLS ONLY AN ORDER UNDER SECTION 554 OF EDUCATION ACT 1996 TAKES PRECEDENCE

i.e. if trustees apply for both Scheme and s.554 order, consideration of Scheme cannot proceed unless DfES consent, and do not  make an order.  Where there is a C of E or other denominational school involved, we should automatically check with DBF whether they intend to apply for a s. 554 Order.  See B4.

N/A N/A

Circumstances in which a s554 order can be made

 

Voluntary or grant maintained school which is connected with a specific denomination, and which is being closed (not transferred) or is about to cease to be used.

Powers under s554

 

·       to extinguish the rights of the beneficiaries (i.e. the revertee beneficiaries) provided all  reasonable steps have been taken to trace the beneficiaries, and either  1. none have been found, or 2. the beneficiaries have waived their interest.

·       to provide for the future application of certain endowments formerly held or used in connection with providing religious instruction at the school.

to authorise the disposal of the land which was formerly held subject to a reverter.

 

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OG27 C6 Application form for a Scheme 5 April 2001 

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OG27 C7 1987 Key legal cases cited 14 March 2012 

Attorney General v Shadwell [1910] 1 Ch 92

In this case a grant was made in 1868 under the School Sites Act 1841 for a school in Northolt which was intended to secure the Church of England character of the School. It was run on that basis (latterly as a maintained public elementary school) until 1907 when the local education authority opened a provided school on a different site. The church school was then only used as a weekly Sunday school. The judge decided that the reverter had taken place when the school ceased to be used during the week notwithstanding that the weekly Sunday school use still continued.

It follows from this decision that if the premises are no longer used for the purposes contemplated in the grant, then the reverting event occurs.  The fact that the premises continued thereafter to be used for some other specified statutory purpose contemplated by the legislation in question but not included in the specific Trust Deed will not prevent this.  In this case the Trust was established under section 2 for the sole purpose of providing a school for the education of poor persons the fact that the site continued to be used as a Sunday School that provided education for poor persons in “religious and useful knowledge” (another of the statutory purposes contained in section 2) following the closure of the school would not be sufficient to prevent the reverting event taking place if that Sunday school use did not form part of the original trusts.

Bath & Wells Diocesan Board of Finance v Jenkinson [2002] 4 All ER 245

Land was conveyed in 1872 under s.2 (a) of the School sites act 1841.  The rest of the estate was sold to a company, with the purchase price being satisfied by the allotment of fully paid-up shares in the company’s capital.  In 1981 the company was dissolved and in 1984 the school site ceased to be used for the purposes of the 1841 Act.  The site was sold in 1990 and the proceeds of sale were held, under the Reverter of Sites Act 1987, by the current rector of the parish on trust for the persons entitled under the s.2 reverter.  The beneficial owners of the shares in the company contended that, but for its dissolution in 1981, the company would have been the person so entitled.

Held: s.2 of the 1841 Act held that the persons entitled to the land immediately following the reverter were to be traced on the hypothesis that the land had never been conveyed under that Act. It followed, in this case that, but for its dissolution, the company would have been beneficially entitled to the proceeds of the sale of the school site.

Fraser v Canterbury Board of Finance (No.1) [2001] Ch 669

A school was established in 1872 to be “in union with and conducted according to the principles and in furtherance of the ends and designs of the National Society for Promoting the Education of the Poor in the Principles of the Established Church throughout England and Wales”.  In 1874 the school was transferred to the School Board under a memorandum of arrangement made under s.23 of the Elementary Education Act 1870.  The school became a ‘provided school’, having previously been a ‘voluntary school’.

This appeal was dismissed on the grounds that the reverting event took place in 1874 when the school was transferred.  The land granted as a site for a school thereupon ceased to be used for the purposes mentioned in the 1841 Act.  The relevant purposes mentioned in the 1841 Act are those to which the grantor expressly devoted the site in the 1872 conveyance. In the event of a reverter taking place the land reverted to the estate of the original grantor of the land and not to the owners of the neighbouring land out of which the site had been carved and conveyed and Marchant v Onslow (see below) was disapproved. The Court of Appeal’s approach to determining when reverter occurred was itself disapproved by the House of Lords in Fraser v Canterbury Board of Finance (No. 2) (see below).

Fraser v Canterbury Diocesan Board of Finance (No.2) [2006] A.C.377

In 1866 land was conveyed under the School Sites Act 1841 for the education of “the labouring manufacturing and other poorer classes” of St Philip’s Maidstone. The school continued in operation until 1995 when it was closed and the site sold. It was contended that any reverter was statute barred under the Limitation Act as the school had long since ceased to be used for the education of the labouring manufacturing and other poorer classes.

The House of Lords found that the trustees were still providing “for the education of poor persons” (the first of the statutory purposes contained in section 2 of the Schools Sites Act 1841) and consequently that there had been no reverter prior to the time of the school’s closure in 1995 irrespective of whether the trustees were also educating middle class children and those from outside the ecclesiastical district in which the school was located. The House of Lords overruled the judgement of the Court of Appeal in this case and disapproved the Court of Appeal’s approach in Fraser v Canterbury Diocesan Board of Finance (No. 1) (see above) and that of the Court in Habermehl v Attorney General (see below) in determining when reverter actually takes place. The House of Lords provided the interpretation of Attorney General v Shadwell that appears above.

(A further skirmish in relation to the site of St Philip’s school was decided in Fraser v Canterbury Diocesan Board of Finance [2007] EWHC 1590. In this case as a preliminary issue it was determined that the reverter was actually triggered when the school closed permanently so that this had the effect that a purchaser of the site had to account for an occupation rent from the time of the reverter until sale, together with the sale proceeds and any interest earned by such proceeds. The judge also accepted that a scheme made by the Minister of Education in 1952 in respect of the property had no effect on the third party rights of revertees.) 

Habermehl & others v Attorney-General & others [1996] EGCS 148

A Church of England school was established in 1854 under the School Sites Act 1841. In 1876 the school became a non-denominational provided school and in 1975 the school was destroyed by fire. It was agreed between all parties that the decision in Attorney-General v Shadwell meant that reverter would take place once the purposes stated in the Deed of Conveyance had ceased (not the statutory purposes contained in the Act) and it followed that the reverter took place in 1876 when the school became a provided school.  As the trustees remained in possession following the reverter and continued to receive rent from the property they had not acknowledged the right of the revertees to the property and they therefore had a better claim to the property than the revertees and their successors and the property was held upon the original charitable trusts contained in the 1854 conveyance.

This appears to provide a broadly similar result to that suggested in Re Ingleton (see below).The judge’s approach to determining the interpretation of Shadwell’s case and the consequent finding that the reversion followed the school becoming a provided school was disapproved of by the House of Lords in Fraser v Canterbury Diocesan Board of Finance (No. 2) (see above).

Marchant v Onslow [1994] 2 All ER 707

In 1848 the defendant’s predecessors in title conveyed a piece of land to the plaintiffs’ predecessors in title to be held by them on trust for use as a school pursuant to the Schools sites Act 1841.  The land conveyed ceased to be used for school purposes in 1984 and was sold in 1987, and the question arose as to whether the proceeds of sale were held on trust by the plaintiff for the benefit of the successors in title to the grantees of the 1848 conveyance, or for the successors in title to the grantor’s land of which the site once formed part.

Held: when a site which had been conveyed pursuant to the 1841 Act ceased to be used for school purposes the site reverted to the same ownership as that of the other land or estate of which it originally formed part.  However, when the land conveyed as a freestanding site and did not form part of a larger estate or parcel of land, it reverted to the original granter or his successors in title. This case was disapproved by the Court of Appeal in Fraser v Canterbury Diocesan Board of Finance (No. 1) (see above).

Re Clayton’s Deed Poll [1979] 3WLR 351

In this case a conveyance of a school site under the provisions of the School Sites Act 1841 was made in 1854.  Until 1957 the school continued as a Church of England school. From 1957 until 1973 when the property was vacated it was used as a state school.

It was decided that the reverter occurred in 1973 and that an equitable interest arose in favour of the successors to those entitled to the original estate who would be entitled to a conveyance of the legal estate from the current trustees. The effect of the Court’s approach in this case is not reconcilable with Re Ingleton (below) as it discounts the possibility of a revertee’s rights becoming statute barred.

Re Ingleton [1956] All ER 881

In this case a school founded in 1846 under the provisions of the School Sites Act 1841 closed in 1929. No claim was made by anyone entitled as revertee and the premises were used for various purposes until sale in 1952. The question that arose was whether the trustees could put the proceeds of sale into trust for parochial purposes but the judge decided that although the trustees had obtained a title free from reverter the property was held for the original educational purposes and not for parochial ones. As a result of this approach it appeared that it would be possible for any rights of a revertee to be statute barred under the Limitation Act.

Re Rowhook Mission Hall [1984] 3 All ER 179

This case was decided after The Law Commission Report and involved two separate originating summonses concerning separate parcels of land which had been subject to reverter under s.2 of the School sites Act 1841 because the land had ceased to be used for the purposes specified in the original grant.  The question arose as to whether the land was then held on trust for the person entitled under the reverter (ie the revertee), or whether time began to run, for the purposes of obtaining a possessory title, in favour of the trustees in whom the land was vested before it ceased to be used for the purposes specified in the grant.

The judge decided that time began to run in favour of the trustees and against the revertee due to the length of time the trustees had held the land since the reverting event occurred. The judge did not follow the approach in Re Clayton’s Deed Poll (above).

OG27 D1 Capital Gains Tax liability 26 March 2001

Under s.256(2) of the Taxation of Chargeable Gains Act 1992, where property held on charitable trusts ceases to be subject to such trusts, there is a deemed disposal and reacquisition of the property at market value, and any chargeable gain arising on such disposal will not attract charity relief from capital gains tax.

There will be such a disposal on the occurrence of the reverting event  unless the revertee is immediately known to be a charity.  If the revertee is not identified as a charity, the trustees of the new trust of land may, strictly, be assessed to capital gains tax on the occurrence of the reverting event, and on any subsequent sale of the premises.  Any income earned by the trustees may be assessed to income tax without the availability of charity relief.

An extra-statutory concession by the Inland Revenue resolves this problem by ignoring any change in the status of the trust of land on the occurrence of the reverting event, if within 6 years of the reverting event a Scheme is made under the 1987 Act or under the Education Act 1996.

Any capital gains or income tax paid by the trustees during the period between the reverting event and the establishment of the Scheme will be repaid with repayment supplement.  The Board of Inland Revenue will also, at the trustees’ request, agree to postpone the collection of tax charged where the revertee has not been identified.  If the revertee is subsequently found not to have charitable status, the postponed tax will become payable with interest.

Any enquiries about this should be addressed to the Capital and Valuation Division (CGT). HMRC.

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OG27 G1 Series Glossary 26 March 2001 

Beneficiary 

Means the person, people or body who stands to benefit under the trust of land created by s.1 of the Reverter of Sites Act 1987, ie the person, people or body who would have been the revertee had the 1987 Act not been passed.

 

1987 Act

Means the Reverter of Sites Act 1987.

 

1996 Act

Means the Trusts of Land and Appointment of Trustees Act 1996.

 

Relevant Acts

For the purposes of the Reverter of Sites Act 1987 these are :

  • the School Sites Acts;
  • the Literary and Scientific Institutions Act 1854; and
  • the Places of Worship Sites Act 1873

 

Revertee(s)

The person, people or body to whom land conveyed under one of the relevant Acts reverts, that is, the person etc who become the beneficiary under the trust of land to which the property originally given is subject.

 

Reverter 

Occurs when land given for one or other of the purposes of the relevant Acts ceases to be used for the purposes for which it was given (or ceases for a particular period of time to be used for those purposes).  Reverter changes the nature of the trust of land to which the property is subject.  The trust of land becomes one in favour of the beneficiary.

 

School Sites Acts

The collective title the School Sites Acts, encompasses:

 

  • the School Sites Act 1841; and
  • the School Sites Acts 1844, 1849, 1851 and 1852, which amplified and extended the 1841 Act.

 

Statute-barred

Where a claim by a beneficiary is statute-barred, it means that someone other than the beneficiary has treated the land which belongs to the beneficiary on the on the occurrence of the reverting event as if it had belonged to that other person.  If the beneficiary does nothing to assert his / her ownership for a sufficiently long period, usually 12 years, the law extinguishes the beneficiary’s ownership of the land, and the other person acquires ownership.

 

Trustees

In this particular instance, the term “trustees” is not necessarily synonymous with “charity trustees”, as the former refers to those people (sometimes holders of certain ecclesiastical offices) in whom the land is vested on a trust of land.  Before the reverting event occurs the trust of land will be for one or the other of the purposes contemplated by the relevant Acts and so will usually be charitable.  But after the reverting event occurs, the trust of land will only be charitable:

  • if the beneficiary is a charity; or
  • if and when a Scheme has been made under the 1987 Act; or
  • if and when an Order has made under section 554 of the Education Act 1996 extinguishing the rights of a non-charitable beneficiary.

 

Trust of land 

Is defined by s.1 of the 1996 Act as any trust of property which consists of or includes land.  For present purposes, it includes all the trusts which arise: 

  • under grants made under one or the other of the Relevant Acts; or
  • under the 1987 Act,

whenever the trusts were created, unless and until all the land held in the trust has been disposed of. 

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