## Facts

- The case arose from the closure of a pension scheme established by Richards & Wallington Industries Ltd.
- The pension scheme had surplus funds remaining after its termination.
- The trust deed and scheme rules did not explicitly provide guidance on the distribution of this surplus.
- Trustees sought the court's direction regarding the rightful recipients of the surplus: whether it should revert to the employer or be distributed among the beneficiaries.
- The employer argued the surplus should revert to it under the bona vacantia rule, while the trustees contended it should be paid to the beneficiaries.

## Issues

1. Whether the surplus funds in the pension scheme should be distributed to the employer or the beneficiaries upon closure of the scheme.
2. How the trust deed, scheme rules, and general trust law principles, including resulting trusts and the bona vacantia rule, apply to surplus distribution.
3. Whether trustees are obligated to consider both the wording of trust documents and principles of fairness in distributing surplus assets.

## Decision

- The court found that the trust deed and scheme rules required strict adherence by the trustees.
- It determined that the surplus did not revert to the employer, as neither the trust documents nor the nature of the surplus supported such a claim.
- The surplus was to be distributed to the beneficiaries, in line with the objectives of the pension scheme and the settlor’s intentions.
- The court rejected the application of bona vacantia, finding that the surplus was not ownerless property.
- Trustees were reminded to act in the best interests of beneficiaries and to interpret trust documents according to both their language and intended purpose.

## Legal Principles

- Distribution of surplus in pension trusts is governed primarily by the trust deed and rules of the scheme.
- Trustees must act in accordance with the terms of the trust and prioritise the interests of beneficiaries.
- Resulting trusts may arise where the beneficial interest is not fully disposed of, potentially returning property to the settlor.
- The bona vacantia doctrine applies only where property is genuinely ownerless.
- Trust law requires consideration of both strict legal rights and principles of fairness in surplus distribution.

## Conclusion

The judgment established that, absent express provision in the trust documents, surplus in pension fund trusts should be distributed to beneficiaries rather than reverting to the employer, underscoring the primacy of trust deed interpretation and the fiduciary duties owed by trustees.

Davis v Richards & Wallington Industries Ltd [1990] 1 WLR 1511