Hunter V Moss
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''Hunter v Moss''
994 Year 994 ( CMXCIV) was a common year starting on Monday of the Julian calendar. Events By place Byzantine Empire * September 15 – Battle of the Orontes: Fatimid forces, under Turkish general Manjutakin (also the governor ...
1 WLR 452 is an
English trusts law English trust law concerns the protection of assets, usually when they are held by one party for another's benefit. Trust law, Trusts were a creation of the English law of English property law, property and English contract law, obligations, a ...
case from the
Court of Appeal An appellate court, commonly called a court of appeal(s), appeal court, court of second instance or second instance court, is any court of law that is empowered to Hearing (law), hear a Legal case, case upon appeal from a trial court or other ...
concerning the certainty of subject matter necessary to form a trust. Moss promised Hunter 50 shares in his company as part of an employment contract, but failed to provide them. Hunter brought a claim against Moss for them, arguing that Moss's promise had created a trust over those 50 shares. The constitution of trusts normally requires that trust property be segregated from non-trust property for the trust to be valid, as in '' Re London Wine Co (Shippers) Ltd''. 986PCC 121 On this occasion, however, both Colin Rimer in the
High Court of Justice The High Court of Justice in London, known properly as His Majesty's High Court of Justice in England, together with the Court of Appeal (England and Wales), Court of Appeal and the Crown Court, are the Courts of England and Wales, Senior Cour ...
and Dillon, Mann and Hirst LJJ in the Court of Appeal felt that, because this case dealt with intangible rather than tangible property, this rule did not have to be applied. Because all the shares were identical, it did not matter that they were not segregated, and the trust was valid. The decision was applied in '' Re Harvard Securities'', creating a rule that segregation is not always necessary when the trust concerns intangible, identical property. The academic reaction to ''Hunter'' was mixed. While some called it "fair, sensible and workable", or noted that "Logically the decision in ''Hunter v Moss'' appears a sensible one",
Alastair Hudson Alastair Hudson (born 6 November 1968), FHEA, FRSA, is an English barrister and academic. He was, in 2017/18, employed at the University of Strathclyde, Glasgow and is also visiting professor of law at the University of Portsmouth. He has wor ...
felt that "doctrinally, it is suggested that the decision in ''Hunter v Moss'' is wrong and should not be relied upon", because it contradicted existing property law and drew a distinction between tangible and intangible property he felt to be "spurious".


Facts

Moss was the managing director and son of the founder of Moss Electrical Co Ltd. He owned 950 of the 1,000 issued shares. In September 1986 he said that Hunter, the finance director, could have 50 of these shares as part of his employment. Crucially, he made no statement or trust involving the other 900 shares. This gift of 50 shares was never implemented because of tax concerns, the risks of a takeover, and mainly because Moss changed his mind. Hunter brought a case against Moss claiming his 50 shares, which rested on two issues. First, whether the language used was sufficient to create a trust, and second, whether or not the trust failed to provide the
three certainties The three certainties compose a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object. "Certainty of intention" means that it must be c ...
because of the lack of segregation between the shares. A valid trust requires
three certainties The three certainties compose a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object. "Certainty of intention" means that it must be c ...
– certainty of intention (that the donor intends to make a trust) certainty of subject matter (that the property to make up the trust is identifiable) and certainty of object (that the beneficiaries are identifiable). The normal rule for certainty of subject matter is that the property intended to be in the trust be separated from other property, showing clarity in what is intended to be trust property. If there is no clear separation, the trust will fail. ''Re London Wine Co'' concerned creditors of a bankrupt wine trading company, who argued that they should be able to claim the bottles of wine they had paid for. The problem was that these bottles were not individually identifiable, and Oliver J held that:


Judgment

In the High Court Colin Rimer QC, sitting as a Deputy High Court Judge, held that since the shares were all identical, the lack of segregation between them did not invalidate the trust. The standard case in this area, '' Re London Wine Co (Shippers) Ltd'', was distinguished because the subject matter there was potentially different, while all of Moss's shares were identical. Rimer J instead cited with approval '' Rollestone v National Bank of Commerce in St. Louis'', a decision of the
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where it was held that there was no need for segregation in such a situation. On appeal, the
Court of Appeal An appellate court, commonly called a court of appeal(s), appeal court, court of second instance or second instance court, is any court of law that is empowered to Hearing (law), hear a Legal case, case upon appeal from a trial court or other ...
held there was a valid trust. Giving the leading judgment Dillon LJ said the trust was valid, first, because it was necessary for there to be one to enforce the terms of the employment contract. Second, he distinguished ''Re London Wine Co'', saying, "That case is a long way from the present. It is concerned with the appropriation of chattels and when property in chattels passes. We are concerned with a declaration of trust". He instead concluded that as there was no tangible distinction between the shares, and as such no reason to hold the trust void just because the shares had not been segregated. As such, the trust was valid.


Significance

''Hunter'' is commonly cited as having said that with intangible, identical property, it is not necessary to segregate the trust and non-trust sections. In fact Dillon LJ never said such a thing, although "it is the obvious conclusion to draw rom his statement. He merely distinguished ''Re London Wine Co'', allowing him to decide the case on the facts alone. ''Hunter'' was reluctantly applied in '' Re Harvard Securities'', where
Neuberger J David Edmond Neuberger, Baron Neuberger of Abbotsbury (; born 10 January 1948) is an English judge. He served as President of the Supreme Court of the United Kingdom from 2012 to 2017. He was a Lord of Appeal in Ordinary until the House of Lord ...
reluctantly decided that it had said there was no need to segregate intangible property. Outside of
England and Wales England and Wales () is one of the Law of the United Kingdom#Legal jurisdictions, three legal jurisdictions of the United Kingdom. It covers the constituent countries England and Wales and was formed by the Laws in Wales Acts 1535 and 1542. Th ...
, the decision has not been applied. In ''White v Shortall'', the
Supreme Court of New South Wales The Supreme Court of New South Wales is the highest state court of the Australian States and territories of Australia, State of New South Wales. It has unlimited jurisdiction within the state in civil law (common law), civil matters, and hears ...
explicitly rejected Dillon's reasoning. Campbell J nonetheless reached the same conclusion (that a settlor could declare a valid trust of an unascertained parcel of shares that was part of a larger fund), albeit by different reasoning. The case met a mixed reaction from academics. Jill Martin, in an article in the ''Conveyancer and Property Lawyer'', argued that the case was "fair, sensible and workable... tis a welcome example of the court's policy of preventing a clearly intended trust from failing for uncertainty".Martin (1996) p.227 Alison Jones, in a different article for the same journal, said that "Logically the decision in Hunter v Moss appears a sensible one",Jones (1993) p.471 but noted that it did create "difficult questions". Other academics were more critical, with David Hayton writing in the ''
Law Quarterly Review The ''Law Quarterly Review'' is a peer-reviewed academic journal covering common law throughout the world. It was established in 1885 and is published by Sweet & Maxwell. It is one of the leading law journals in the United Kingdom. History Th ...
'' that "the unreserved judgment of Dillon LJ.... may well come to be stigmatised".Hayton (1994) p.335
Alastair Hudson Alastair Hudson (born 6 November 1968), FHEA, FRSA, is an English barrister and academic. He was, in 2017/18, employed at the University of Strathclyde, Glasgow and is also visiting professor of law at the University of Portsmouth. He has wor ...
wrote that "doctrinally, it is suggested that the decision in ''Hunter v Moss'' is wrong and should not be relied upon". Firstly, it contradicts an element of property law which requires there be "specific and identifiable property" to be subject to a property right. Secondly, he suggests it is difficult to see why there should be a dividing line between intangible and tangible property, since there are some principles which apply to both.Hudson (2009) p.105 500 ball bearings are tangible, but identical; under ''Hunter'', there is no reason these should also not require separation, so the distinction between tangible and intangible is thus "spurious".Hudson (2009) p.106


References


Bibliography

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