Introduction
Certainty of subject matter is a core rule in trust law. It requires that trust property must be clearly defined and separate for a trust to work. Without this, the trustee cannot perform duties properly, and courts have no grounds to step in. The case of Hunter v Moss [1994] 1 WLR 452 set out a key exception to this rule for assets such as company shares. The court decided that when shares are identical and part of a larger group, exact allocation is not needed to meet certainty rules. This decision has had clear effects on how trusts for share-based assets are made and managed.
The Traditional Certainty of Subject Matter Requirement
Before Hunter v Moss, trust property had to be exactly outlined. Cases like Re London Wine Co (Shippers) Ltd [1986] PCC 121 showed this rule for physical assets. There, a trust over wine bottles failed because specific bottles were not set aside. This showed the need for clear identification to set the trust’s limits. The rule makes sure trustees and beneficiaries know exactly what is covered.
The Facts of Hunter v Moss
Mr. Moss, the defendant, owned 950 shares in a private company. He stated he would hold 50 shares in trust for Mr. Hunter, the plaintiff. Importantly, Mr. Moss did not identify which 50 shares were meant. This raised questions about whether the trust met certainty rules.
The Court of Appeal's Decision
The Court of Appeal confirmed the trust’s validity. The court focused on the difference between physical assets and identical assets like shares. Unlike wine bottles, which are unique, shares of the same type in a company are the same. The court ruled that separating specific shares was not required. Saying 50 shares out of 950 was enough because any 50 shares would meet the duty.
Implications for Intangible Property
The Hunter v Moss ruling set a key standard for trusts involving identical assets. It confirmed that for assets like shares, physical separation is not needed. This approach has been applied to other identical assets, such as money in bank accounts, as in MacJordan Construction Ltd v Brookmount Erostin Ltd [1992] BCLC 350. However, this only works where assets are truly the same.
Distinguishing Hunter v Moss from Other Cases
The Hunter v Moss rule applies only to identical shares in one company. If shares differ by company or type, exact identification is still needed. This shows the need for clear wording when making trusts involving shares. The case does not change rules for physical assets. Re Goldcorp Exchange Ltd [1995] 1 AC 74 later confirmed the difference between physical and non-physical assets for certainty.
Conclusion
The Hunter v Moss decision marks an important point in trust law. It clarified how certainty rules work for identical assets like shares. By treating shares differently from physical items, the court gave a useful way to create trusts over such assets. This ruling has shaped later cases and stays a key part of trust law. The rules apply only to identical assets and do not remove the need to identify trust property clearly in general. The case shows how asset type affects trust rules.
