Hunter v Moss [1994] 1 WLR 452 is a pivotal case on certainty of subject matter in the creation of an express trust. It established that a trust over an unsegregated portion of identical intangible property (such as shares) can be valid, even if the specific units are not physically separated from a larger bulk.

Facts and Outcome

The defendant was the registered owner of 950 shares in a company called MEL, which had a total issued share capital of 1,000 shares. He made an oral declaration of trust in favour of the plaintiff over 5% of the issued share capital — exactly fifty shares. He later argued the trust was void for uncertainty because he had not identified or segregated which fifty of his 950 shares were held on trust. The Court of Appeal rejected this and held the trust was valid.

Judicial Reasoning

Dillon LJ gave the leading judgment:

  • Identity of property: because all 950 shares were of the same class in the same company, they were identical. There was no uncertainty as to what was held on trust — 50 shares — and it did not matter which 50.
  • Testamentary analogy: had the defendant left fifty shares by will, the gift would be valid and the executors would simply satisfy it from the estate; there was no reason an inter vivos declaration should differ.
  • Distinguishing tangible property: the court distinguished Re London Wine Co (Shippers) Ltd, where a trust over unsegregated wine failed because wine is tangible and even bottles of the same vintage may differ (some “corked”), requiring segregation. Shares are intangible and essentially interchangeable.

Authority, Legal Legacy and Criticism

The decision remains the “current orthodoxy” for intangible property, but has faced scrutiny:

  • The intangible/tangible distinction: Neuberger J in Re Harvard Securities Ltd followed it, treating shares like debts or funds rather than chattels, though he admitted he was “not particularly convinced”, following precedent as a first-instance judge.
  • Criticism of the testamentary analogy: David Hayton argued the analogy with wills is “dubious” — in a will the whole estate passes to an executor with a duty to administer it, whereas a settlor declaring a trust must divest themselves of beneficial ownership in specific property at the moment of declaration.
  • The co-ownership alternative: in White v Shortall (Australia) and Pearson v Lehman Brothers Finance SA, the courts suggested such trusts create a beneficial co-ownership (tenancy in common) of the entire fund, so the beneficiary owns a proportionate share of every unit rather than specific unsegregated units.
  • Fungibility: some support the case on the basis that one share of a class is legally equivalent to any other, so segregation is a formality serving no practical purpose for modern financial instruments.