Hunter v Moss [1994] 1 WLR 452

Facts

• The defendant owned 950 out of 1000 issued shares in a private company.
• The defendant orally declared a trust over 50 shares (5% of the share capital) in favour of the claimant without identifying which specific shares were held on trust.
• The defendant did not segregate or specifically allocate the 50 shares.
• The central dispute concerned whether the lack of specification or segregation of the shares meant the trust failed for uncertainty of subject matter.
• The claimant asserted a valid trust was created; the defendant argued the trust could not be valid due to lack of identifiable trust property.

Issues

1. Does a trust over an intangible asset (like shares) require the specific identification or segregation of units for its subject matter to be sufficiently certain?
2. Can a trust be validly constituted over a specified number of identical shares without specifying which particular shares are held on trust?

Decision

• The Court of Appeal held that a valid trust had been created for the 50 shares, even without specifying which particular shares were subject to the trust.
• Dillon LJ distinguished between tangible property (chattels) and intangible assets, holding that identical shares did not require physical segregation or specification.
• The court rejected analogies to cases involving chattels (such as Re London Wine Co), stating such precedent did not apply to intangible assets like shares.
• The court found that, as with gifts by will, it was sufficient to specify a number of shares of a certain class, regardless of identification of particular units.

Legal Principles

• For intangible assets such as identical shares, physical segregation or allocation is not required for certainty of subject matter in a trust.
• The precedent applies differently from cases involving tangible property, where assets must be specifically identified.
• The reasoning drew parallels to testamentary gifts of shares but was criticised for not adequately addressing differences in the timing and nature of beneficial interest passing under wills versus trusts.
• Subsequent cases, such as Re Harvard Securities, followed Hunter v Moss for intangible assets, distinguishing chattels and recognising the practical challenges of requiring specific identification of identical shares.
• The case has sparked academic debate for relaxing the certainty of subject matter requirement in trusts regarding intangible property.

Conclusion

Hunter v Moss established that a trust over intangible, identical assets like shares is valid without allocation of specific units, setting a distinct exception to the traditional requirement for certainty of subject matter in trust law and influencing subsequent case law and academic commentary.