This, it seems, is not true - though it was widely believed at the time. Tudor Pole's reasons for insisting that the building be purchased were quite different, to do with securing the property so as not to allow a different group of people to gain control of what was essentially an integral part of the Chalice Well gardens. Having secured it he promptly leased it to Milfield School, and by the time the building was eventually demolished it was in very bad condition and unfit for use as a hostel anyway.
The Chalice Well Trust's own history says virtually nothing about all this, but I am hoping that documents still held in the Chalice Well archive will help me to fill out the story and perhaps finally put an end to a controversy that has never really been resolved.