• In the case of Davis v Richards Wallington [1990] 1 W.L.R. 1511, it was held that although the definitive deed of a trust (where a group of companies were the beneficiaries) was not executed until after the termination of the relevant pension scheme, it was effective and its terms binding on the trustees. A resulting trust does not arise upon dissolution if there was no intention from the employees that they should receive the surplus.

Facts of the Case

  • Through an interim trust deed dated 24th April 1975, a group of companies parented by C established a pension scheme for its employees.
  • The deed outlined that each employee would contribute a proportion of their salary to the pension fund. The employers would contribute further amounts to enable the fund to be paid through an insurance policy.
  • The companies and trustees would execute, within 24 months from the date, a definitive trust deed with rules written by C with the approval of the subsidiaries and trustees for the administration of the scheme.
  • Other companies joined the scheme and their funds transferred to the same trustees. In September 1981, the definitive deed was submitted to all companies.
  • On 31st July 1982, the struggling companies terminated the scheme. The fund exceeded the outstanding benefits by £3m.
  • On 6th August 1982, the definitive deed and amendment were executed by C and two trustees. The third had resigned, had his name struck out, and was no longer willing to act as a trustee.


  • Was the definitive deed effective even if it was not executed until after the relevant fund had been terminated?

Held by the Chancery Division

  • On the facts, the employer alone was entitled to the surplus since express provision had been made for this on the trust deed.
  • Even if the trust deed was invalid, the surplus would have been held on a resulting trust for the employers, not the employees.

Scott J

  • All fiscal privileges of an occupational pension scheme depend on the scheme being certified by Inland Revenue as complying with the relevant statutory criteria.
  • If the scheme complies with the Social Security Pensions Act 1975, its members can be contracted out of the state national insurance scheme. An approved scheme is not subject to the rule against perpetuities.
  • The argument that the third trustee remained in that role after his resignation due to the dates of relevant paperwork does not hold water. All concerned had treated the written resignation as effective. For the court to hold that he still owed fiduciary duties that required him to execute the definitive deed, would be to permit the merest technicality to override the apparent intentions of all parties.
  • The evidence leads to the inference that the company which wrote up the rules acted for the group as a whole. No subsidiary acted to intervene. C approved the rules as that company prepared and returned the deed to the trustees for execution. It cannot be claimed that the subsidiaries did not approve the rules by their conduct, nor that would invalidate the trust.
  • “The question of when a particular power may be exercised is one of construction of the instrument creating the power. So, the question whether the definitive deed could still be validly executed on 6 August 1982 is one of construction of the interim trust deed of 24 August 1975. But it is not right, in my view, to approach the question as one concerning the exercise of a power. The execution of a definitive deed bringing into effect approved rules was, under clause 5(a), mandatory, not permissive. There was an obligation, and not simply a power, to execute. The approval of the rules by the trustees, by C and, if I am right in the view I have already expressed, by other members of the group, had preceded the termination by C of its liability to contribute to the scheme. So immediately before 31 July 1982 there was a mandatory obligation on C and the other members of the group to execute the deed” [1536F].