England and Wales High Court (Chancery Division) Decisions

The Bath and Wells Diocesan Board of Finance & Anor v Jenkinson & Ors [2002] EWHC 218 (Ch) (26th February, 2002)

IN THE HIGH COURT OF JUSTICECHANCERY DIVISION

		Royal Courts of JusticeStrand, London, WC2A 2LL
		26th February 2002

Mr Justice Etherton :

Introduction

1. This the hearing of an application by The Reverend Noel Anthony Hector, Rector of Wrington ("the Trustee"), for directions concerning the beneficial ownership of the proceeds of sale of the site of the former Redhill Church of England Voluntary Aided School in Avon ("the School Site"). The First to Fourth Defendants ("the Defendants") claim that they are entitled to those proceeds of sale.

2. The School Site was conveyed in 1872 by the 4^th Duke of Cleveland to the then Rector of Wrington under the provisions of the School Sites Act 1841("the 1841 Act"). The School Site ceased to be used for the purposes of a school in August 1984, and was sold by the then Rector of Wrington in 1990. By virtue of the Reverter of Sites Act 1987, the Trustee holds the proceeds of sale on trust for the persons entitled under the statutory reverter in s. 2 of the 1841 Act ("the s. 2 reverter")

3. Doubts have arisen as to the identity of the person or persons entitled under the s. 2 reverter.

The Factual Background in more detail

4. The School Site formed part of the Bathwick and Wrington estates, in Somerset (the Somerset Estate"), of the 1^st Duke of Cleveland.

5. The 1^st Duke had 3 sons and 3 daughters. None of his sons had any issue. The 3 daughters had issue, creating, in very broad terms, the three family lines which I shall call the Forester family line, the Milbank family line, and the Hay-Drummond family line respectively.

6. By the 1^st Duke's will dated 15^th June 1836 the Somerset Estate was settled on complex trusts, the broad effect of which was that, if his two eldest sons died without issue, the Somerset Estate would be held on trust for life for his third son, who in due course became the 4^th (and last) Duke, and then his sons in tail male, and then, subject to an annuity in favour of Henry William Forester, on trust for Frederic Acclom Milbank (" F. A. Milbank") for life and then his sons in tail male.

7. The 1^st Duke died on 29^th January 1842.

8. The 1st Duke's eldest son, who became the 2^nd Duke, died in 1864, without issue, as I have said.

9. The 1^st Duke's second son, who became the third Duke, also died in 1864, without issue, as I have said.

10. On 17^th June 1872 a disentailing assurance in respect of the Somerset Estate ("the 1872 Disentailing Assurance") was executed by the 4^th Duke, F. A. Milbank and his eldest son William Henry Vane Milbank ("W.H.V.Milbank"). By an indenture of the same date ("the 1872 Appointment") executed by them, the Somerset Estate was appointed and transferred to the 4^th Duke.

11. By a conveyance dated 5th November 1872 ("the 1872 conveyance"), expressly stated to be made under the authority of the 1841 Act and the School Sites Act 1844, the School Site was conveyed by the 4^th Duke to the Rector of Wrington to be used for the purposes of the School Sites Acts.

12. By the 4^th Duke's will dated 22nd July 1891 he devised "all the manors advowsons messuages lands and hereditaments in the County of Somerset which at my death I shall be entitled to or have power to dispose of for an estate in fee simple legal or equitable" to his great nephew Francis William Forester ("F. W. Forester") for life with remainder to his sons in tail male. He left his residuary estate, as to one half, to his great nephew Arthur William Henry Hay-Drummond for life with remainder to such of his issue as he should appoint, and, as to the other half, to his great nephew Powlett Charles John Milbank on like trusts.

13. The 4^th Duke died on 21^st August 1891.

14. On 19^th July 1920 F. W. Forester and his son Henry William Forester ("H. W. Forester") executed a disentailing deed ("the 1920 Disentailing Deed") in respect of "ALL the lands and hereditaments in the County of Somerset devised by the said Will [of the 4th Duke"] of or to which the said Henry William Forester was under the said Will seised for an estate in tail male ... expectant on the death of the said Frederick William Forester". By an indenture of the same date ("the 1920 Resettlement"), F. W. Forester and H. W. Forester appointed, among other things, "ALL THOSE messuages lands fee farm rents and hereditaments ..... known as the Bathwick Estate and all ...hereditaments of freehold tenure held for an estate in fee simple comprised in [the 1920 Disentailing Deed]" to be held, in the events which happened, on trust for F. W. Forester for life, with remainders over.

15. By a contract of 4th September 1924 ("the 1924 Contract") between F. W. Forester and The Bathwick Estate Company ("the Estate Company") F. W. Forester agreed, as tenant for life, to sell to the Estate Company "all ... the messuages lands and hereditaments situate at Bathwick and Wrington .. or elsewhere in the County of Somerset of which [F. W. Forester] is tenant for life in possession [under the 1920 Re-settlement]". By clause 3 of the 1924 Contract, the purchase price of £187,492 was to be satisfied by the allotment of fully paid up shares in the capital of the Estate Company.

16. The allotment of shares in the Estate Company, in satisfaction of the purchase price under the 1924 Contract, was made on 29^th October 1924.

17. The 1924 Contract was never, so far as is known, completed by the formal legal transfer of the lands and hereditaments comprised in it.

18. A resolution for the voluntary winding up of the Estate Company was passed on 18^th February 1974. The Estate Company was dissolved on 31st December 1981. There was no distribution of any rights under the s. 2 reverter.

19. The Defendants are the beneficial owners of the shares in the Company.

20. On 31st August 1984 Redhill School closed, and the School Site ceased to be used for the purposes of the 1841 Act.

21. In May 1990 the School Site was sold for £190,000. As at 31st May 1998 the amount held by the Trustee, representing the proceeds of sale and interest, was £311,335.34

The Defendants' claim

22. The Defendants claim that the right to the School Site or its proceeds under the s. 2 reverter passed under the devise of the Somerset Estate in the 4^th Duke's Will, and was vested in F. W. Forester for life under the 1920 Disentailing Deed and the 1920 Resettlement. They claim that F. W. Forester, acting properly within his powers as tenant for life under the Settled Land Act 1882, contracted to sell the s. 2 reverter rights to the Estate Company by the 1924 Contract, and that, following allotment of shares in the Estate Company in October 1924, in satisfaction of the purchase price payable under the 1924 Contract, the Estate Company was beneficially entitled to the s.2 reverter rights. If that is correct, then those rights will, they accept, have vested in the Crown as bona vacantia, on the dissolution of the Estate Company in 1981. The Treasury Solicitor has indicated that the Crown is willing to vest in the Defendants, as the owners of the shares in the Estate Company, any rights the Crown may have in the proceeds of sale of the School Site.

The legislation

23. Section 2 of the 1841 Act, so far as relevant, is in the following terms.

". . . Any person, being seised in fee simple, fee tail, or for life, of and in any manor or lands of freehold, copyhold, or customary tenure, and having the beneficial interest in therein, . . . may grant, convey, or enfranchise by way of gift, sale, or exchange, in fee simple or for a term of years, any quantity not exceeding one acre of such land, as a site for a school for the education of poor persons, or for the residence of the schoolmaster or schoolmistress, or otherwise for the purposes of the education of such poor persons in religious and useful knowledge; provided that no such grant made by any person seised only for life of and in any such manor or lands shall be valid, unless the person next entitled to the same in remainder, in fee simple or fee tail, (if legally competent,) shall be a party to and join in such grant . . . Provided also, that upon the said land so granted as aforesaid, or any part thereof, ceasing to be used for the purposes in this Act mentioned, the same shall thereupon immediately revert to and become a portion of the said estate held in fee simple or otherwise, or of any manor or land as aforesaid, as fully to all intents and purposes as if this Act had not been passed, any thing herein contained to the contrary notwithstanding."

24. Fee simple owners as well as limited owners may convey land under the authority of s. 2. It is well established that the s. 2 reverter applies to a conveyance by an absolute owner who conveys under s. 2, even though he does not require the assistance of s. 2 to convey the land: see Re Cawston's Conveyance [1940] Ch. 27. A reason why an absolute owner would wish to convey under s. 2 would be to take advantage of the s.2 reverter, since any express non-statutory right of reverter to the same effect would have infringed s.1 of the Charitable Uses Act 1736, which required a conveyance for charitable uses to be without any "power of revocation, reservation, trust, condition, limitation, clause or agreement whatsoever, for the benefit of the donor or grantor or of any person or persons claiming under him". Further, any such right of reverter would have been, or at least arguably would have been, void for remoteness at common law, that is to say it would have or might have infringed the rule against perpetuities: Re Cawston's Conveyance at p. 33, and see the discussion in the Law Commission Report on Rights of Reverter (1981) p.2 footnote 2.

25. In the case of the grant of a fee simple interest under the 1841 Act, the effect of the s.2 reverter, prior to commencement of the Reverter of Sites Act 1987, was that, on the land ceasing to be used for the relevant purposes, the grantee's legal estate in the land automatically determined, and the grantor became entitled to a legal fee simple in the land: Re: Rowhook Mission Hall [1985] Ch 62, 73F-74C, 76A-79A

26. The Reverter of Sites Act 1987 replaced the statutory reverter of land under s. 2 of the 1841 Act with a trust for sale (now a trust of land) as follows. Section 1(1) of the 1987 Act prevents the grantee's fee simple from determining on the event which would have triggered the reverter, and instead provides that the land should continue to be vested in the grantee but on trust. Section 1(2) provides that the trust is for the persons who would be entitled to the ownership of the land by virtue of the reverter, with power to sell and hold the net proceeds of sale in trust for them. Section 2 enables the trustees to apply to the Charity Commissioners for an order extinguishing the rights of beneficiaries (s.2(1)(a)), and substituting a trust for charitable purposes (s.2(1)). This, however, is subject to 3 safeguards for the revertees. First, no order can be made so long as a claim is outstanding, or has been accepted, or upheld in proceedings (except with the claimants' consent): see s.2(5)(b), s.2(6). Second, if reverter had not happened before the 1987 Act commenced, or an application is made within 12 years after the reverter, the trustees are required to advertise and take such steps as are reasonably practicable to them to take to trace the persons who are or may be beneficiaries: see s.2(5)(a), s.3(1), (2), (4) Third, any order that is made must provide for a beneficiary, whose rights have been extinguished and who makes a claim within 5 years after the order, to be paid compensation: see s.2(4).

The Doubts

27. Doubts have been raised as to the beneficial entitlement of the Defendants in the following respects.

28. First, a question has been raised as to whether the 1872 Disentailing Assurance and the 1872 Appointment were effective to vest the freehold of the School Site in the the 4^th Duke, who only had a life interest in that property under the 1^st Duke's Will. If he had only a life interest, the 1872 Conveyance would have been invalid and ineffective since the person next entitled did not join in the Conveyance.

29. Second, there is a doubt as to whether the possibility of reverter of the School Site under the s. 2 reverter was capable of being devised by the 4^th Duke's will or whether it descended automatically to his legal heirs.

30. Third, if the possibility of reverter was capable of being devised by the 4^th Duke's will, there is a doubt as to whether it passed, with the devise of the Somerset Estate, to F.W. Forester for life with remainder to his sons in tail male; or whether it passed under the residuary devise to members of the Milbank and the Hay-Drummond family lines. The doubt is as to whether the wording of the devise of the Somerset Estate was apt to include the possibility of reverter, and, if it was, whether it was in any event legally possible to settle the possibility of reverter on successive interests

31. Fourth, there is a doubt as to whether the possibility of reverter of the School Site was resettled by the 1920 Disentailing Deed and the 1920 Resettlement. The doubt is as to whether, at that time, the possibility of reverter was legally capable of alienation at all during the lifetime of the person in whom it was vested, and, even if it was, whether its inclusion in a disentailing assurance fell within s.15 of the Fines and Recoveries Act 1833. Even if it was capable of being dealt with under s.15 of the 1833 Act, there is doubt as to whether the wording of the 1920 Disentailing Deed or the 1920 Resettlement was apt to include it.

32. Finally, as regards the 1924 Contract, which purported to be made by F. W. Forester as tenant for life, there is a doubt as to whether, in relation to the possibility of reverter under the s.2 reverter, he was a tenant for life under the Settled Land Acts 1882 to 1890.

Representation

33. Mr. Christopher Nugee Q.C. appeared before me on behalf the Trustee. Considerable time and cost would be required to trace the person or persons entitled to the School Site if the Defendants fail in their claim. Accordingly, rather than carry out that exercise at this stage, merely in order to join them to the proceedings, the Trustee has taken the view, rightly and sensibly, that the Trustee should put before the Court the doubts that I have mentioned above as to the Defendants' claim and should place before the Court such arguments as can properly and reasonably be made in response to that claim.

34. Mr. Thomas Baxendale has appeared before me for the Defendants.

The First Issue: the 4^th Duke's title

35. The 4^th Duke, as I have said, was granted a life interest in the Somerset Estate under the 1^st Duke's Will. Unless the 1872 Disentailing Assurance and the 1872 Appointment were valid and effective to vest in the 4^th Duke an absolute feeehold interest in the School Site, the 1872 Conveyance was ineffective. That is because s. 2 of the 1841 Act requires, in the case of a conveyance by a life tenant, that the conveyance will not be valid "unless the person next entitled to [the land] in remainder, in fee simple or fee tail .. shall be a party to and join in such grant". The 1872 Conveyance was by the 4^th Duke alone.

36. The doubt has arisen as to the validity and effectiveness of the 1872 Disentailing Assurance and 1872 Appointment because the evidence is that, prior to the execution of those documents, W. H. V. Milbank, the eldest son of F. A. Milbank, had been adjudicated bankrupt, but his trustee in bankruptcy was not a party to the 1872 Disentailing Assurance

37. The evidence shows that, in early 1872, not only was W.H.V Milbank bankrupt but his father was also heavily in debt. Instructions were sent to the distinguished counsel Sir Roundell Palmer and Mr. Edward Wolstenhome to advise how the 4^th Duke could acquire an indefeasible estate in fee simple in the Somerset Estate and provide financial assistance to F. A. Milbank and his son without encumbering the 4^th Duke's title to the Estate. The Case to Counsel stated that the son's debts were about £60,000 and could be compromised for about £30,000. Counsel advised in writing on 19^th March 1872 that F. A. Milbank and his son, and the trustee in bankruptcy of the son, with the consent of the 4th Duke as protector of the settlement, could bar the estate tail of W. H. V. Milbank and an unusual shifting use under the 1^st Duke's will, and could convey to the 4th Duke an indefeasible estate in fee simple in the Somerset Estate. They also recommended that a sum be provided to pay in full, or by a composition of not less than 10/- in the pound, the bankruptcy debts of W. H. V. Milbank so as to procure his discharge under s. 4 of the Bankruptcy Act 1869 and so obviate the necessity for the concurrence of the trustee in bankruptcy in the barring of the entail.

38. The 1872 Appointment was expressed to be executed in consideration of, among other things, the payment of various sums by the 4^th Duke to W. H. V. Milbank to enable him to discharge his debts and for other purposes.

39. In Milbank v. Vane [1893] 3 Ch 79 the Court of Appeal confirmed that the 1872 Disentailing Assurance and the 1872 Appointment were effective to vest the freehold of the Somerset Estate in the 4^th Duke. It appears that no-one in that case raised any doubts on the ground that W. H. V. Milbank's trustee in bankruptcy was not a party to those deeds.

40. In the light of all the evidence, it is right, in my judgment, to infer that the trustee in bankruptcy of W. H. V. Milbank was not a party to the 1872 Disenstailing Assurance and the 1872 Appointment because, in accordance with the advice of counsel, his debts had been paid in full or had been compromised and he had procured his discharge from bancruptcy.

41. Accordingly, the 1872 Conveyance was validly made under s. 2 of the 1841 Act and was subject to the s.2 reverter.

The Second Issue: Could the rights under the s.2 reverter be devised by the 4^th Duke's Will?

42. As I have said, the Defendants claim that the rights under the s. 2 reverter passed, under the devise of the Somerset Estate in the 4^th Duke's Will, to F. W. Forester for life with remainder to his sons in tail male.

43. Mr. Nugee Q.C. submits that there is a doubt as to whether the rights under the s. 2 reverter were legally capable of being devised by will at the time of the 4^th Duke's will.

44. On the grant of land pursuant to the 1841 Act, there was created in the grantee a determinable fee simple, and there was retained in the grantor a possibility of reverter. The conventional view is that, at common law, such a possibility of reverter was descendible (that is to say, passed automatically to the heirs), but was not devisable or assignable. In Re Rowhook Mission Hall [1985] 1 Ch. 62 at p. 73H to p. 74C, Nourse J. said:

"The combined effect of the 1874 conveyance and the [School Sites] Act of 1841 was to vest in the trustees a fee simple determinable on the land ceasing to be used for such of the purposes mentioned in the Act as were specified in the conveyance: see Attorney-General v Shadwell [1910] 1 Ch 92. Before 1926 a determinable fee simple was capable of existing as an estate at law and it invariably existed as such in a case of this kind. The grantor, i.e. the revertee, retained a possibility of reverter, a bare possibility as it was sometimes called, being no estate or interest in the land but a right descendible, although not devisable, at common law. On cessation of the user for the purposes specified the trustee's fee simple determined and the revertee's possibility of a reverter matured into a fee simple absolute. The occurrence of those events was simultaneous and automatic. In contrast with the case of a fee simple upon a condition, there was no necessity for entry or any other act on the part of the revertee. Authority for these basic propositions will be found in Challis's Real Property, 3rd ed.(1911), pp. 76, 82-83 and 251 et seq., and in Megarry and Wade, The Law of Real Property, 4th ed. (1975). 74-77."

45. In Challis's Law of Real Property (3^rd ed.) at p. 76 three kinds of "possibility" are described as follows:

"(1) Possibilities coupled with an interest; as contingent remainders and executory interests; which so soon as the person in whom they will vest, if they do vest, is ascertained, are both descendible and deviseable.

(2) Bare possibilities; as the possibility of reverter on the breach of a condition, and the possibility of reverter upon a common law fee other than a fee simple ; these at common law are descendible but not deviseable.

(3) Absolutely bare possibilities, or mere expectations of possible benefits, not founded upon the dispositions or provisions of any operative assurance. These at common law are neither descendible or deviseable; though the succession of children by representation in heirship often did, so far as the expectations of heirs are concerned, amount practically to the same thing. But, in strictness, they did not succeed to the expectation, but to the heirship upon which it was founded."

The s. 2 reverter falls within the second category

46. It is important to bear in mind that Challis' second category comprises two distinct types of "possibility", namely a right of entry in respect of a fee simple defeasible by condition subsequent and a possibility of reverter on a determinable fee. The difference between a fee simple defeasible by condition subsequent and a determinable fee is not always easy to discern. In Megarry & Wade's The Law of Real Property (6^th ed.), at para. 3-064, the essential distinction is described as being "that the determining event in a determinable fee itself sets the limit for the estate first granted. A condition subsequent, on the other hand, is an independent clause added to a limitation of a complete fee simple absolute which operates so as to defeat it." A determinable fee automatically determines when the specified event occurs, and the reverter then takes place automatically. In the case of a fee simple upon condition, the grantor has a right to enter and determine the estate when the event occurs: unless and until entry is made, the fee simple continues.

47. Challis, perhaps confusingly, refers to both of these special and distinct rights as a "possibility of reverter". He comments on them further, as follows, at pp. 82-83:

"Possibility of Reverter

Reverter and reversion are synonymous terms, denoting an estate vested in interest though not in possession; but the word reverter is sometimes loosely used to denote what is properly styled possibility of reverter. Possibility of reverter denotes no estate, but as the name implies, only a possibility to have an estate at a future time. Of such possibilities there are several kinds; of which two are usually denoted by the term now under consideration:- (1) the possibility that a common law fee may return to the grantor by breach of a condition subject to which it was granted, and (2) the possibility that a common law fee, other than a fee simple, may revert to the grantor by the natural determination of the fee.

Since every remainder and every reversion is a part only of the estate of the grantor or settlor, it follows that, by the common law, no remainder can be limited in expectancy upon the determination of a fee, and that no reversion can remain in a grantor or settlor who parts with a fee.There cannot exist two common law fees in the same land.(Co.Litt. 18a ; Willion v Berkley, Plowd. 223, at p.248; and authorities cited in the margins.) In regard to a fee simple and a determinable fee, this proposition has never been disputed. In regard to a conditional fee, Preston treats it as being not indisputably certain, but as depending only upon a preponderance of authority"

48. Megarry & Wade also state, at para. 3-076, that a right of entry and a possibility of reverter were not themselves estates but merely special rights incident to other estates, and for that reason were, at common law, descendible but not alienable by a lifetime transfer or devisable.

49. Mr. Baxendale does not dispute these analyses by commentators, save that he submits that it was not entirely settled at common law that a possibility of reverter within Challis' second category was not an "estate". In this connection, he referred to a statement in Jackson & Gosset's Investigation of Title (6^th ed.), at p. 339, that "The question whether a possibility of reverter of a fee simple estate is itself an estate is the subject of contradictory decisions". He also referred to the following comments of North J. in Pemberton v. Barnes [1899] 1 Ch. 545 at pp. 548-9.

"If the case of Doe v Simpson was all that I had to guide me, I should have said that a possibility of reverter was an estate; for this reason. In that case there was a conditional fee created by a father's will in his eldest son, who was also his customary heir, and the possibility of reverter being undisposed of descended to the son. The decision was that the interests were united, and a fee simple absolute was vested in the son. The reason of the decision is clearly put by Tindal C.J.: "We therefore think Dr. John Simpson took under his father's will a fee simple conditional at common law; and that upon the death of the father, the possibility of a reverter in the father descended to and came upon the son, and that the fee simple absolute, and the fee simple conditional coming together, the fee conditional merged therein, according to the doctrine laid down by Lord Hardwicke in Ves. Sen, 355." The doctrine referred to in that case is found in the case of Bishop of Sodor and Man v. Earl Derby in these words: "for which I rely on the case in Carthew, that a fee simple conditional cannot stand together with an absolute fee, but will be merged in it." If those cases stood alone, I should have thought that that in which an estate merged must itself have been a larger estate, and that a possibility of a reverter in which a fee simple conditional was merged was itself an estate within the ordinary meaning of the term. But I must say that, on the other hand, several authorities have been cited to me which seem somewhat inconsistent with that view, and to negative that conclusion that a possibility of reverter is itself an estate. The question does not often arise, and I do not think it necessary now to decide between these conflicting authorities, because I think that the Wills Act applies to the present case."

50. Mr. Baxendale did not, however, seek to persuade me that a bare possibility of reverter within Challis' second category was devisable or assignable at common law, that is to say prior to the Wills Act 1837 (as to devise) and the Real Property Act 1845 (as to assignment). So far as concerns descent on death, therefore, the critical issue is whether such a reverter was made deviseable by s. 3 of the 1837 Act.

51. Section 3 of the 1837 Act was in the following terms:

"III And be it be further enacted, That it shall be lawful for every Person to devise, bequeath, or dispose of, by his Will executed in manner herein-after required, all Real Estate and all Personal Estate which he shall be entitled to, either at Law or in Equity, at the Time of his Death, and which if not so devised, bequeathed, or disposed of would devolve upon the Heir at Law, or Customary Heir of him, or, if he became entitled by Descent, of his Ancestor, or upon his Executor or Administrator; and that the Power hereby given shall extend to all Real Estate of the Nature of Customary Freehold or Tenant Right, or Customary or Copyhold, notwithstanding that the Testator may not have surrendered the same to the Use of his Will, or notwithstanding that, being entitled as Heir, Devisee, or otherwise to be admitted thereto, he shall not have been admitted thereto, or notwithstanding that the same, in consequence of the Want of a Custom to devise or surrender to the Use of a Will or otherwise, could not at Law have been disposed of by Will if this Act had not been made, or notwithstanding that the same, in consequence of there being a Custom that a Will or a surrender to the Use of a Will should continue in force for a limited Time only, or any other special Custom, could not have been disposed of by Will according to the Power contained in this Act, if this Act had not been made; and also to Estates pur autre vie, whether there shall be or shall not be any special Occupant thereof, and whether the same shall be Freehold, Customary Freehold, Right, Customary or Copyhold, or of any other Tenure, and whether the same shall be a corporeal or an incorporeal Hereditament; and also to all contingent, executory, or other future Interests in any Real or Personal Estate, whether the Testator may or may not be ascertained as the Person or one of the Persons in whom the same respectively may become vested, and whether he may be entitled thereto under the instrument by which the same respectively were created or under any Disposition thereof by Deed or Will; and also to all Rights of Entry for Conditions broken, and other rights of Entry; and also to such of the same Estates, Interests, or Rights respectively, and other Real and Personal Estate, as the Testator may be entitled to at the Time of his Death, notwithstanding that he may become entitled to the same subsequently to the Execution of his Will."

52. Section 1 of the 1837 Act defined "Real Estate" as extending to

"Manors, Advowsons, Messuages, Lands, Tithes, Rents, and Hereditaments, whether Freehold, Customary Freehold, Tenant Right, Customary or Copyhold, or of any other Tenure, and whether corporeal, incorporeal, or personal, and to any individual Share thereof, and to any Estate, Right, or Interest (other than a Chattel Interest) therein;"

53. Eminent authors have expressed uncertainty as to whether the language of s. 3 of the 1837 Act is such as to include possibilities of reverter within Challis' second category. Challis (3^rd ed) contains the following passage at p. 228:

"The Statutes of Wills were repealed by the Wills Act, 7 Will. 4 & 1 Vict. c. 26, s. 2 . But sect.3 of that Act confers upon every person not under special disability power to devise all real estate to which he shall be entitled at the time of his death; and by virtue of the definition clause, the words real estate extend to any estate, right, or interest, other than a chattel interest, in any hereditaments, notwithstanding that he may become entitled thereto subsequently to the execution of his will

The same enactment expressly includes within its provisions " all rights of entry for conditions broken, and other rights of entry." This language is undoubtedly sufficient to include the possibility of the reverter of an estate of fee simple, upon breach (or performance, as the case may require) of a condition.

It is at least doubtful whether the language of the Wills Act is sufficiently wide to include the possibility of reverter expectant upon the determination of a determinable fee. But it is not improbable that, if the question should arise, such a possibility would be held to pass under a will clearly showing an intention to devise it. The question is not likely to arise in practice, because the only kind of determinable fee which occurs in practice, is the kind specified at p. 256, infra,..."

54. Similarly cautious language is used in Megarry and Wade's Law of Real Property (6^th ed) at para. 3-076 :

"Alienablility of the expectant interest. At common law a right of entry and a possibility of reverter were descendible but not alienable inter vivos, for they were not themselves estates but merely special rights incident to other estates. Nor did they become devisable by the Statute of Wills 1540. But rights of entry for condition broken were made devisable in 1837 and alienable inter vivos in 1845. They may also now be made exercisable by any person, not merely by the grantor or his successors in title, so that they may now be given to some other person at the moment of their creation. It is not quite so clear that a possibility of reverter is devisable or assignable, but it seems highly probable that it is, at least after 1925."

55. Mr. Baxendale, on the other hand, drew my attention to the following passage in Morris and Leach's The Rule Against Perpetuities (2nd ed) at p. 210 :

"At common law, possibilities of reverter and rights of entry were descendible but not devisable or alienable; but they have been made devisable and alienable by statute"

A footnote to the word "devisable" refers to s. 3 of the 1837 Act and to Pemberton v. Barnes.

56. There is also the following passage in Williams on Wills (8^th ed.) at p 76:

"Rights of entry for condition broken and rights of reverter are devisable"

A footnote refers to s.3 of the 1837 Act, and to Pemberton v. Barnes.

57. Mr. Baxendale referred me to similar statements in Jackson & Gosset's Investigation of Title (6^th ed.) at p. 339, and Halsbury's Laws of England (4^th ed.) Vol. 50 (1998 reissue) para. 279, the footnotes to both of which also refer to Pemberton v. Barnes.

58. Pemberton v. Barnes concerned an appointment, the effect of which was summarised by North J. as being "to create a fee simple in Thomas Kay Barnes conditional on the birth of issue male, leaving an unappointed possibility of reverter in Thomas Barnes [the grandfather of Thomas Kay Barnes]" . Thomas Kay Barnes died without having had any issue. One of the questions for the Court was whether the possibility of reverter was devisable by reason of s.3 of the 1837 Act. North J. held that it had passed by will. In the course of his judgment, North J. said:

"The section [i.e. s. 3 of the 1837 Act] enacts, "that it shall be lawful for every person to devise, bequeath, or dispose of, by his will executed in manner hereinafter required, .... all rights of entry for conditions broken and other rights of entry." It seems to me that the rights of entry there mentioned include a right of entry on a breach of condition or determination of a fee simple conditional."

59. It is clear, from the judgment as a whole, that North J. was not expressing any view about a bare possibility of reverter on a determinable fee, as distinct from a possibility of reverter on the breach of a condition within Challis' second category. He referred to passages from Coke upon Littleton to the effect that "where a fee simple is given to a man conditionally on his having heirs, it is not an improper use of language to speak of the condition having been broken if he has no heir." Furthermore, and most telling, he cites and relies upon part of the passage from Challis which I have set out in paragraph 54 above, stopping short of Challis' comment dealing with the "doubtful" effect of the 1837 Act on the possibility of reverter upon the determination of a determinable fee. Accordingly, it is clear that Pemberton v. Barnes is not authority for the proposition that such a reverter was made devisable by s. 3 of the 1837 Act.

60. Turning to the wording of s. 3 itself, Mr. Nugee Q.C. submitted that its structure and contents could be subdivided as follows: first, it dealt with the disposition of "real estate" and personal estate; then with customary freeholds and copyholds; then estates pur autre vie; then with "contingent, executory, or other future interests in any real or personal estate"; and then with "rights of entry for condition broken and other rights of entry"; and then "such of the same estates, interests, and rights respectively, and other real and personal estate as the testator may be entitled to at the time of his death, notwithstanding that he may become entitled to the same subsequently to the execution of his will." Plainly, a bare possibility of reverter, within Challis' second category, does not fall within those parts of s.3 dealing with customary freeholds and copyholds and estates pur autre vie. Mr Nugee Q.C. submitted that, in accordance with the conventional view, which I have already mentioned, it does not fall within that part dealing with "real estate" and "contingent, executory or other future interests", since a bare possibility of reverter on a determinable fee does not comprise any species of estate or legal or equitable interest. He submitted that conclusion is reinforced by the express separate reference in s. 3 to "rights of entry for conditions broken, and other rights of entry". A bare possibility of reverter on determination of a determinable fee is not a right of entry for condition broken nor, Mr. Nugee Q.C. submitted, is it within the class "other rights of entry", since the land reverts automatically, without re-entry, upon determination of a determinable fee. Finally, in this analysis, he submitted that the concluding class of estates, rights and interests specified in s. 3 only concerns property acquired between the date of the will and the death of the testator.

61. In my judgment, Mr. Nugee Q.C.'s suggested approach to the interpretation of s. 3, which, as I have emphasised, he has advanced purely for the benefit of the Court in order to test the Defendants' claim and in the absence of anyone else before the Court to represent the interests of those who would be entitled in the absence of the Defendants' claim, is too narrow and restrictive. I accept Mr. Baxendale's submission that it is apparent that the draftsman of the 1837 Act intended to make devisable every kind of interest which was capable of passing on death to another. That is the very essence of a "hereditament", which is included in the express definition of "real estate" in s.1 of the 1837 Act. In my judgment, that intention is plain from the language of the Act itself, and, in particular, section 3. Furthermore, it is made perfectly clear by the proceedings in Parliament leading to the enactment of the 1837 Act. Hansard shows that Lord Langdale, in moving the Bill which became the 1837 Act, said:

"It is so important to the welfare of families, and to the general interests of the community, that men should be able to dispose of their property by will, and that their lawful intentions should be faithfully carried into execution after their deaths, and the laws under which these objects are to be effected are now attended with so much doubt and perplexity, that I am induced to hope that an attempt to introduce some improvement will not be considered to require any apology.. . . According to the policy of this country, it is desirable that the property which a man may dispose of by his will should comprise every thing which he has - i.e. every thing he has for an interest which endures beyond his own life, and which, in default of any disposition made by him, would devolve upon the person who is designated by the general law as his real or personal representative, and, generally speaking, the law as it stands, gives this power of disposition - but there are some exceptions, and one of the objects of this Bill is to remove those exceptions"

Mr. Nugee Q.C accepted that the reference to "his real ... representative" in that passage must have been, properly speaking, a reference to the heir, since, at that date, real property vested automatically on death in the heir. In my judgment, the passage in Hansard is admissible, for the purpose of construing s. 3 of the 1837 Act, under the principles in Pepper v. Hart [1993] AC 593.

62. In my judgment, a possibility of reverter on determination of a determinable fee is devisable under the provisons of s. 3 of the 1837 Act as falling within the expression "real estate", being a hereditament (within the definition of "real estate" in s. 1) "which if not so devised ...would devolve upon the heir at law ..." Alternatively, it falls within the expression "other rights of entry"in s. 3. In that connection, Mr. Nugee Q.C. was not able to suggest, on his narrow approach to interpretation, any rights of entry, other than for condition broken, which might fall within the expression "all rights of entry for conditions broken, and other rights of entry". Alternatively, and finally, it falls within the expression "other real and personal estate, as the testator might be entitled to at the time of his death". Again, Mr. Nugee Q.C. was not able to suggest, on his narrow approach, what might fall within those words.

63. This wider interpretation of s. 3 gives effect to the manifest purpose of the section, without unduly offending the actual language used by the draftsman.

64. It is of some comfort that the distinguished draftsmen of the 1925 property legislation apparently took this same wider approach to the interpretation of s.3 of the 1837 Act. The Administration of Estates Act 1925 s.52 defines "real and personal estate" as meaning "every beneficial interest (including rights of entry and reverter [my emphasis]) ... in real and personal estate which ... he could, if of full age and capacity, have disposed of by his will .."

The Third Issue: Did the School Site pass under the devise of the Somerset Estate in the 4^th Duke's Will ?

65. Mr. Baxendale submitted that the obvious intention of the 4^th Duke, in his will, was to divide his real property between different branches of his family. In particular, his Somerset Estate was intended to pass to the Forester family line. He submitted that it would manifestly not have been the intention of the 4^th Duke that, if there was a reverter of the School Site, that small plot of land should not revert to the then holder of and form part of the Somerset Estate, but should fall into his residuary estate and so be divided between the Milbank family line and the Hay-Drummond family line. I agree with Mr. Baxendale to this extent, that, if the 4^th Duke had thought about the matter at all, his intention would have been as Mr. Baxendale submitted.

66. The issue, however, is whether the language of the devise of the Somerset Estate can fairly be interpreted so as to include the rights under the s. 2 reverter.

67. Mr. Baxendale submitted that they can be so construed by dividing the devise into two parts: namely, a devise of "all the manors advowsons messuages lands and hereditaments in the County of Somerset which at my death I shall be entitled to"; and a devise of "all the manors advowsons messuages land and hereditaments in the County of Somerset which ... I shall have ... power to dispose of for an estate in fee simple legal or equitable." Mr Baxendale submitted that, if so interpreted, the rights under the s. 2 reverter would fall within the first part of the devise as a hereditament in the County of Somerset to which the 4^th Duke was entitled at his death.

68. While acknowledging the intellectual elegance of this analysis and the skill of its presentation, I cannot accept it. Mr. Baxendale's objective was, of course, to link and confine the words "for an estate in fee simple legal or equitable" to the second part of the suggested devise, since, on any footing, the rights under the s. 2 reverter were not held for such an estate.

69. It is impossible, in my judgment, for the devise to be interpreted in the way suggested by Mr. Baxendale. It is quite inconsistent with the structure and grammar of the language used. Or, put differently, if that had been the intention of the draftsman, the correct language and grammar of the devise would have been quite different: for example, "all the manors advowsons messuages land and hereditaments in the County of Somerset to which I shall be entitled at the date of my death and such other manors advowsons messuages land and hereditaments in the County of Somerset over which I have a power of disposal for an estate in fee simple legal or equitable..." Furthermore, it is inconceivable that the draftsman would have expressly described the tenure of part only of the property included within the devise, but left wholly unqualified the tenure of the other property within the devise. That itself would have created doubt and uncertainty as to the scope and meaning of the devise; whereas, reading the devise in its natural and ordinary sense, that is to say applying the expression "estate in fee simple" to the entire devise, leaves no doubt or uncertainty.

70. In my judgment, it is clear that the words "for an estate in fee simple legal and equitable" qualify and govern everything intended to be included within the devise of the Somerset Estate.

71. Accordingly, insofar as the Defendants' claim depends upon characterising the s. 2 reverter rights as a mere possibility of reverter upon determination of a determinable fee, and tracing title to those rights under the 4^th Duke's will, the Defendants' claim would fail. It is not necessary, on that basis, to consider the remaining issues of doubt set out in paragraphs 30 to 32 above.

The statutory fiction

72. Mr. Baxendale had a quite separate line of argument in support of the Defendants' claim. In summary, he submitted that the proviso to s. 2 of the 1841 Act created a statutory fiction that, upon the relevant land ceasing to be used for the purposes of the 1841 Act, the land was to be regarded, for the purposes of the s. 2 reverter, as if it had never been conveyed under the 1841 Act. The effect of that fiction, in the present case, he submitted, is that the School Site is to be regarded as having formed part of the 4^th Duke's Somerset Estate at the date of death, and so devolved as mentioned in paragraph 22 above.

73. This was a novel, powerful and attractive submission. It was anticipated by Mr. Nugee Q.C., in his opening submissions. Mr. Nugee Q.C. fairly accepted that, if correct, if provides a neat and simple solution to the tracing of the devolution of rights of reverter under the 1841 Act. Performing his task of assisting the Court with such arguments as might fairly be made in opposition to the Defendants' claims, he submitted that such limited authority as exists is not supportive of the "statutory fiction" argument, and that it involves reading too much into the wording of s. 2 of the 1841 Act.

74. So far as counsel are aware, there is no direct binding authority for or against the "statutory fiction" argument.

75. It is clear, from the passage in the judgment of Nourse J. in Re Rowhook Hall at pp. 73-74, which I cited earlier in this Judgment, that Nourse J. was of the view that s.2 reverter rights are properly characterised as a bare possibility of reverter, title to which is to be traced in accordance with established legal principles. On the other hand, the proper method of establishing the identity of the revertee was not in issue before him, and his comments on the point are observations which do not form a binding precedent. The actual issue in the case was whether, on the closure of a school which had been conveyed pursuant to the 1841 Act, and which continued to be in the possession of the plaintiff trustees without any interruption or adverse claim, time began to run in favour of the trustees of the land and the title of the revertee (whoever that might be) was barred, or alternatively the land was held in trust for the revertee so that time did not run. He held that, when the land ceased to be used as a school, the possibility of reverter matured into a fee simple absolute which vested the legal estate automatically in the revertee and, since time ran in favour of the trustees from that time, the revertee's title was barred. The decision of Nourse J. does not preclude the "statutory fiction" argument advanced by Mr. Baxendale in support of the Defendants' claim in the present case.

76. On the other hand, Mr. Baxendale relies upon two reported cases which, he submits, are powerful support for the "statutory fiction" approach. Firstly, he referred to the following passage in the judgment of Sir Wilfrid Greene MR in Re Cawston's Conveyance at pp. 37-38.

"In connection with his argument Mr Wigan relied upon the phrase in s. 2, that the land granted should revert to and become a portion of the said estate, namely, the estate out of which it was carved, as fully to all intents and purposes as if the Act had not been passed. He says that if the Act had not been passed, then in the case of a conveyance by an absolute owner there never would have been any reverter and, therefore, there cannot in such a case be a reverter under the terms of the proviso. But, in my opinion, that argument really will not bear examination. It is based upon a construction of this proviso, which appears to me to be quite hopelessly narrow. The phrase "revert . . . . as fully to all intents and purposes as if the Act had not been passed" in relation to any conveyance which is made under the Act is really a quite inaccurate expression to begin with, because if the Act had not been passed, the conveyance, so far as it required the Act to give it validity, would never have been made and, therefore, there would never have been any question of the land leaving the grantor; in fact what it means, it appears to me, is merely this, that in the circumstances stated the land is to come back and join up again with the estate from which it was derived as though the transaction carried out under the powers of the Act had never taken place."

77. Sir Wilfrid Greene then referred to Dennis v. Malcolm [1934] Ch. 244, in which a similar view had been expressed by Clauson J., in the following passage at p. 250:

"In my view it is plain that the deed is intended to operate and operate only under the [1841] Act, and the effect of dealing with the matter as if the Act had not been passed is to destroy the authority under which and under which alone the grant was intended to operate : the result is therefore in my view precisely the same as if the statute had said the reverter is to take place as if the grant had not been made."

78. Second, Mr. Baxendale referred to the recent decision in Fraser v. Canterbury Diocesan Board of Finance [2001] Ch 669. In that case, the Court of Appeal, overturning Marchant v. Onslow [1995] 1 Ch. 669, held that the words "the said estate" in the provision in s. 2 of the 1841 Act that "[the land] shall thereupon immediately revert to and become a portion of the said estate held in fee simple or otherwise" were not referring to a landed estate, that is to say a specific physical area of land, but rather to "a technically precise legal concept, namely the common law scheme for the temporal division of land holdings into interests of different duration (for life, in tail or in fee simple)"(see para. 42 of the Report). Mr. Baxendale relies particularly upon the following passage in the judgment of Mummery LJ, at para. 44:

"This construction of the proviso is reinforced by the expression that the land reverts " as fully to all intents and purposes as if this Act had not been passed". The grant has not, in other words, changed the temporal extent of the estate of which the grantor was seised or the way in which the land was held by the grantor before he made the grant. The reverter is of that estate held on that tenure to the original grantor of the site and not to the land out of which the site granted was carved and conveyed."

79. In my judgment, Mr. Baxendale is correct in his submission that, on the proper interpretation of s.2 of the 1841 Act, the persons entitled to the land immediately following the reverter are to be traced on the hypothesis that the land was never conveyed under the 1841 Act. That conclusion is powerfully supported by the reasoning in the passages in Re Cawston's Conveyance, Dennis v. Malcolm and Fraser v. Canterbury Diocesan Board of Finance which I have cited above. Furthermore, it is consistent with the object of the 1841 Act and gives effect to the likely intention of the draftsman. The object of the 1841 Act was to encourage landowners to give land for educational purposes, in the knowledge that the land would revert if those purposes ceased in the future. The Act was passed at a time when substantial landed estates were the rule rather than the exception. It is not likely that the draftsman of the 1841 Act contemplated, or the landowners at whom it was directed would have wished that the reverter of the land would be to a person or persons outside the landowner's power of selection (a bare possibility of reverter not being assignable at that time and there being a doubt as to whether it was divisable under the Wills Act 1837) and who might not be the owner or owners of the physical estate out of which the land was granted.

80. Mr. Nugee Q.C. conceded that, if I accepted Mr. Baxendale's "statutory fiction" argument, then the Defendants will have established the beneficial entitlement of the Estate Company. As I have said earlier in this judgment, there is no evidence that the 1924 Contract was ever formally completed by a transfer of the relevant property and property interests to the Estate Company. For the purposes, however, of the bare statutory trust of the proceeds of sale under s. 1 of the Reverter of Sites Act 1987, the person who is absolutely and beneficially entitled to the proceeds of sale is properly to be regarded as the person entitled to the ownership of the proceeds and able to give a valid receipt for them: Fraser at para. 53.

Decision

81. For the reasons given in this judgment, I find that the Estate Company would have been beneficially entitled to the proceeds of sale of the School Site, but for its dissolution in 1981, and that such beneficial entitlement is presently vested in the Crown as bona vacantia.

82. I shall hear counsel as to the form of the order.