Getting into the nettles of restricted gifts

This insight was written by Anna Morris, Solicitor at Lime Solicitors’ Inheritance Disputes Team

In the recent decision of Rittson-Thomas v Oxfordshire County Council, 2019 EWCA Civ 200 the Supreme Court decided that Oxfordshire County Council were at liberty to retain the proceeds of sale from a plot of land used for Nettlebed School, conveyed to them under the School Sites Act 1841 by Robert Fleming in 1914 and 1928.

Whilst the court have now found in the council’s favour and have illustrated that they look to give effect to a donor’s intention to use a gift for its intended charitable purpose, this case serves as a reminder of the risks of making gifts with a specific purpose.

In this case a decision was made by the council in the late 1990s to relocate Nettlebed School. A new school was built on adjacent land and students were subsequently moved to the new site in 2006 with the old premises being sold for development in 2007. The council’s intention was to invest the proceeds of sale in the school.

The heirs to Robert Fleming’s estate relied on section 2 of the Schools Sites Act 1841 and in the first instance were unsuccessful in their request that the High Court grant an order returning the original land to them now that the school had ceased being used for educational purposes.

Upon appeal, the Court of Appeal agreed with the heirs that section 2 had been enacted at the point the students moved from the site some 18 months before completion of the sale and made an order that the majority of the proceeds of sale be distributed amongst them.

This decision clearly had the potential to cause some significant financial harm to the school which was relying upon the monies to reinvest. Further, it could have significant repercussions on other educational establishments who have been given land under the Act and who find themselves needing to move to new sites – due to expansion in an ever growing population or to ensure they are able to keep up with technological advances to provide the best education for their students.

Importantly, the court concluded that they should lean towards the continuation of the original purpose of the gift, rather than trying to find reasons why the land should revert. This is consistent with the court’s general approach in cases like this to try and give effect to a donor’s intentions as best they can.

There is one of a few pieces of legislation from the 1800s that remains on the statute books, but it is still has application, particularly for schools that date back to the Victorian era, and where they might find themselves in the position of wanting to move sites. However the clear message from this decision is that the court will do what they can to allow the charitable purpose to continue, rather than the land reverting to the donor’s family.

Finally, if you are considering disposing or acquiring an older school site which may have been donated under the 1841 Act, it is important to consider the implications  and seek advice on how best to approach this issue prior to contract.

Donors will often want to restrict charitable gifts, in order to fund a particular project or piece of research. However, time moves on, and so can a charity’s objectives and projects. It is important to give thought to that possibility, and, wherever possible, make the gift as flexible as possible, allowing the charity to best use the donation as they see fit, as and when those assets are received.

That does however rely on the key element present in all cases – the element of trust. Donors trusting charities to do the right thing. It is for that reason why communicating an organisation’s culture and long-term goals, are often more important than any short term projects.

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