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Lord Mustil agreed with this result in Re Goldcorp, writing that ‘there is no difficulty with a transaction whereby B promises A that if in the future goods belonging to A come within the physical control of B he will hold them as a bailee for A on terms fixed in advance by the agreement’.21

It follows from what was said above that putting the Sale of Goods Act 1979 aside a trust arises only for the benefit of the buyer and equitable ownership vests in the buyer only when the tangible goods sold can be identified and are physically separated from other assets of the same type owned by the seller. Where the parties agree to buy and sell goods that are part of an identified or unidentified bulk, no trust exists and the buyer does not acquire equitable title unless the seller has declared herself a trustee of a fraction of a certain pool of assets.22

Moreover, a declaration to hold certain assets on trust does not suffice to create a trust in relation to a fraction of a pool of assets of that type. The courts will not read the intention to hold a percentage of a bulk on trust into a trust declaration relating to certain assets. This means that in relation to tangible fungibles a trust declaration regarding 50 units of the tangible concerned will create a trust only if 50 units have been physically separated from other units held by the trustee. No trust will arise as long as the units concerned are mixed with other units of the same tangible asset belonging to the trustee.

7.3.2 Registered securities

We have seen above that the requirement for certainty of the subject matter of a trust is relatively onerous when the assets the trust concerns are tangibles. The law seems less strict in relation to intangibles and in this subsection the rules governing trusts of intangible assets will be addressed.

In Hunter v. Moss,23 the Court of Appeal determined whether the subject matter of a trust of shares was sufficiently certain. The case concerned an express declaration of a trust of registered shares. The declaration concerned 5 per cent of the shares of the settlor’s total shareholding. Dillon LJ observed that all the shares belonged to one class, that 5 per cent of the total shareholding amounted to 50 shares, and the defendant held

21[1995] 1 AC 74 at 97 (PC) per Lord Mustil.

22R. Goode, ‘Ownership and Obligation in Commercial Transactions’, [1997] LQR 433 at 449; Sarah Worthington, Proprietary Interests in Commercial Transactions (Oxford: Oxford University Press, 1996) 28.

23[1994] 1 WLR 452 (CA).

personally more than 50 shares. He continued: ‘it would not be good enough for the settlor to say, ‘‘I declare that I hold 50 of my shares on trust for B’’, without indicating the company he had in mind of the various companies in which he held shares. There would be no sufficient certainty as to the subject matter of the trust. But here the discussion is solely about the shares of one class in the one company.’24

Dillon LJ added that a bequest by the defendant to the plaintiff of 50 of his ordinary shares in M.E.L. would be a valid bequest on the defendant’s death which his executors or administrators would be bound to carry into effect, and came to the conclusion that the subject matter was sufficiently certain and that a trust was validly created in favour of the beneficiary. The trust was established over 50 shares out of the 950 held by the defendant. The beneficiary therefore had the right to ask that 50 shares be delivered to him.

Hunter v. Moss was followed by Neuberger J in Re Harvard Securities Ltd.25

The firm in that case, which had been licensed as ‘dealer in securities and investment adviser’, went into liquidation because it was unable to acquire authorisation under the Financial Services Act 1988. The liquidator applied for a determination of the question whether the company or its clients had a proprietary interest in shares held by a nominee company. Harvard Securities had purchased shares with a view to selling them on to its clients in smaller parcels. The clients were not registered in order to avoid registration fees. Harvard kept records in which there were entries against the names of each client, showing the name of shares; the date of sale to the client; where any bonus or rights had been issued; the date on which any or all of the shares were sold back to Harvard; and the balance (if any) of the client’s holding. Neuberger J found that the fact that Hunter v. Moss concerned an express trust was no basis for distinguishing the case from Re Wait, Re London Wine and Re Goldcorp. The only difference he could find between Hunter v. Moss and these other cases was that Hunter v. Moss involved shares and the others involved tangible goods. He wrote, that in ‘all the circumstances . . . it seems to me that the correct way for me, at first instance, to explain the difference between the result in Hunter, and that in Wait, London Wine and Goldcorp, is on the ground that Hunter was concerned with shares, as opposed to chattels’. But while Neuberger J felt bound to follow Hunter v. Moss, he was not convinced by the distinction.

24Hunter v. Moss [1994] 1 WLR 452 (CA) at 457 per Dillon LJ.

25[1997] 2 BCLC 369.