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Law of Trusts - Why is Hunter v Moss controversial?

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    I've read a few different books on the topic of certainty of subject matter and obvious Hunter v Moss is where some of the critique comes out.

    Is the problem basically the poor reasoning of the Court of Appeal in Hunter v Moss? The reasoning of the Court of Appeal (and trial judge) is that:

    ~ There is a difference between intangible and tangible property. Tangible property is more easily distinguished (e.g. arguments of the trial judge in H v M that a wine bottle could cork, referring to Re London Wine). This is a crude distinction because tangible property can often be indistinguishable - e.g. bullion is, as one academic points out, one and the same. Also, is a share really indistinguishable? Shares each receive unique certificate numbers!

    ~ If a transfer of the 50 shares had been made by will, it would have been valid, so a declaration of trust of 50 shares out of the 950 must be valid too. This is poor reasoning - under a will, a legatee gets an equitable chose in action until the administration is complete and the executors give the legatee whatever shares he was allocated. Under a trust, the beneficiary gets an immediate proprietary interest

    Those are my arguments in red - do they reflect accurately why Hunter v Moss was controversial? It was approved in Holland v Newbury where it was important that there be a distinction between tangibles and intangibles...
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    Goode & McKendrick mention this case in passing (edited as I knew I had seen the argument somewhere and don't want to take credit for it). They claim that Huinter v Moss was absolutely correct:

    When a company issues shares, there is only one piece of property, the "shares as a whole", which cannot be segregated in any way at all. If a company issues 1000 shares and I purchase 100 shares, I am a co-owner in the share capital to the tune of 10%. It does not make sense to say that I "own 100 shares", that is not possible as the individual shares simply do not exist at all.

    If I then want to transfer 50 shares on trust to my friend, with me holding them on trust, it doesn't make sense to ask "which 50 shares", there are no '50 shares', that property doesn't exist, all that happens is I am now legal co-owner of 10% of the share capital, but half of that is held on trust. Or if I transfer them outright, I co-own 5% and my friend co-owns 5%.

    The fact that there may be physical share certificates is neither here nor there, the certificates themselves are not a chose in action (so if I give my friend my share certificates, he has some worthless bits of paper but no co-ownership of the share capital). Share certificates are not negotiable instruments likes bills of exchange, lading, etc. Shares do not have identification numbers in the UK any more (but even if they did the position should be the same since each 'share' would then be a co-ownership in 0.1% of the share capital, not a separate asset, and asking "which 0.1%" is meaningless).

    edit - It's on p64 on Goode & McKendrick on Commercial law if you have it
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    Basically it undermined (or appeared to undermine) the Re London Wine Co. principle. The property was unascertained, so why should the fact it is intangible make it any different, I suppose is the argument. You could say it had the potential to change the law quite a lot, but then Re Harvard Securities Co. affirmed that Hunter v Moss was limited to shares only, hence it has remained good law.

    I think i'd have to disagree with your argument that a share is distinct because of the unique number - that's arguably designed for the ease of the certificate - not the actual shares themselves. Shares are intangible, so you can't really put an identification number on it. The certificate reflects the fact you have bought shares, more than being the actual shares.

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Updated: April 4, 2012
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