“A trust of intangible property need not identify specific assets from a larger identical mass.”
The Court of Appeal held that the trust was valid. A trust of intangible property like shares does not fail for uncertainty merely because specific items are not segregated from a larger identical mass.
Moss owned 950 shares in a private company and orally declared himself trustee of 50 shares for Hunter. The 50 shares were never segregated or appropriated from the larger holding of 950 shares. Hunter claimed beneficial ownership of 50 shares. Moss argued the trust failed for uncertainty of subject matter because the specific shares were not identified.
Whether a trust of 50 shares out of a larger holding of identical shares fails for uncertainty of subject matter when the specific shares are not segregated or identified.
The Court of Appeal (Dillon LJ, with whom Mann and Hirst LJJ agreed) rested its decision on an analogy with testamentary gifts. Dillon LJ reasoned that just as a person can give by will a specified number of his shares of a certain class in a certain company, so equally he can declare himself trustee of 50 of his ordinary shares in the company, and that is effective to give a beneficial proprietary interest to the beneficiary under the trust. Since a bequest of 50 unidentified shares out of a larger holding is valid, an immediate declaration of trust of 50 of 950 identical shares was equally effective without appropriation; there was no tangible distinction between one share and another, and the trust was therefore valid despite the lack of segregation. The court distinguished Re London Wine Co (Shippers) Ltd as 'a long way from the present': that case concerned the appropriation of chattels and when the property in chattels passes, whereas Hunter v Moss concerned a declaration of trust. The broader rationalisation now commonly attached to the case - that segregation is unnecessary for intangible property because any 50 shares of the same class are legally identical to any other 50 - was articulated later, notably by Neuberger J in Re Harvard Securities Ltd [1997] 2 BCLC 369 when following Hunter v Moss.
Hunter v Moss is a leading authority establishing that certainty of subject matter requirements differ between tangible and intangible property. It allows declaration of trusts over part of a holding of identical intangible assets without segregation, significantly impacting commercial and financial contexts.
The ratio is that a trust of intangible property (such as shares) does not fail for uncertainty of subject matter merely because the specific assets have not been segregated from a larger mass of identical assets, unlike the position with tangible property.
The Court of Appeal held that Moss's oral declaration of trust over 50 of his 950 shares was valid despite not segregating or identifying which specific 50 shares were held on trust, because shares are intangible and fungible.
Hunter v Moss is significant because it established different certainty of subject matter rules for intangible versus tangible property, making it easier to create trusts over shares and other intangible assets without segregation, which is particularly important in commercial contexts.
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Hunter v Moss [1994] 1 WLR 452 (CA)
Read the judgment for Hunter v Moss as published by The National Archives (Find Case Law).
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