THE DIOCESE of Canterbury is counting the cost of a failed attempt to hold on to the proceeds of the sale of a Church of England school in Maidstone.

At the end of last week, the House of Lords issued a ruling that the diocesan board of finance was not the legal owner of the land on which St Philip’s School, in Maidstone, Kent, was built. Under the terms of the 1841 School Sites Act, once the school was closed, ownership automatically reverted to the descendants of the two people who had donated the land in 1866. Eighteen descendants have been identified by Fraser & Fraser, a London firm of genealogists. Philippe Fraser, a spokesman, said on Wednesday that the firm had acquired the rights of title from three or four descendants, and therefore stood to gain about a quarter of the proceeds.

The diocese estimates that settling the action, including the payment of legal costs, could cost it up to £400,000. Fraser & Fraser have another 17 cases that they could now pursue, and dioceses around the country are fearful that there could be many more.

The Canterbury diocesan secretary, David Kemp, said this week that the diocese had taken advice before defending the action. An earlier attempt by Fraser & Fraser, involving another school, had failed in the Court of Appeal.

In the Maidstone case, the diocesan board of finance had argued, paradoxically, that it had long ago breached the terms of the 1841 Act by admitting pupils other than the poor of the parish. Consequently, the Frasers’ application was out of time. The Court of Appeal upheld this defence, but Fraser & Fraser appealed to the House of Lords. The Law Lords who heard the case voted unanimously in favour of the Frasers.

The diocese is particularly rueful because the £120,000 from the sale of St Philip’s School was used to fund a new middle school on the Isle of Sheppey. "There aren’t many areas more deprived than that," said Mr Kemp.

An additional twist was that part of the original site had been bought by the church. The 1841 Act made no distinction between donations and purchases: all had to revert if the school closed.

The diocesan director of education, Rupert Bristow, expressed his disappointment at the decision. "The law needs to be changed to stop this unfair and unjust removal of funds from the education system.

"The board of education’s only objective is to improve school provision for the children of Kent. It would be interesting to know how Fraser & Fraser plan to use the proceeds from this case."

Philippe Fraser thought this disingenuous. "The example I sometimes give is if I lend my neighbour my car. Suppose my neighbour happened to die: it wouldn’t entitle his descendants to keep my car."