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Explain the principles relating to certainty of subject matter and critically evaluate the decision in Hunter v Moss.

Extracts from this essay...

Introduction

"Hunter v Moss had been argued and decided before the decision had been given in Re Goldcorp Exchange Ltd. It has therefore been submitted to criticism on the grounds that it is inconsistent with the ringing endorsement by the Privy Council of Re London Wine Co (Shippers) Ltd" In the light of the statement above I am going to with reference to the decided cases explain the principles relating to certainty of subject matter and critically evaluate the decision in Hunter v Moss. Trusts developed in England during the 12th and 13th centuries. Trusts are widely considered to be the most innovative contribution to the English legal system. There is no successful definition of a trust till date, even after many attempts, but it is easier to say what a trust is by description. According to common law a trust is an arrangement that can come in a variety of forms where by property, money or other belongings are managed by a person (or persons or organisations) for the benefit of another, but is owned by the trust. In the case of Knight v Knight Lord Langdale MR identified that in order for a trust to be valid the three certainties must be complied with namely, certainty of intention, certainty of subject matter and certainty of objects.

Middle

So by contractual agreement the exchange would have to keep all the bullion the customer ordered in their vaults in case the customer asked for delivery. After the exchange fell into insolvency this practice slipped it only took delivery of as much bullion as it usually needed to satisfy a customers daily needs. Therefore the contract with their customers was broken as they failed to buy all the bullion in the order. When the exchange went into insolvency it did not stock as much bullion as needed to satisfy the customers' orders even though they had took their money. There were three types of customers who wanted to claim off the exchange saying, that the bullion by contract was held on trust for them. The first type of claimants had proprietary rights in specifically identifiable bullion that the exchange had acquired physically after their order's there claim was successful as the bullion was segregated from all the other bullion that was stored in the vault, therefore the claimants satisfied the requirement of certainty of subject matter. The second type of claimants didn't have their bullion separated from the rest in the vault so there claim failed, as they were not able to identify what belonged to them, so they acquired no rights under the trust.

Conclusion

Looking at shares it is no less important to identify which property is held in the trust and which is not. Secondly the Court of Appeal could have decided there is valid trust in Hunter v Moss as there was enough shares to satisfy the claim, it could not be the same in Goldcorp as there were more claims then there was property to satisfy them. Also there is no reason why there should be any different rules between tangible and intangible property. There would have been a better distinction between cases where legal owners of the property is solvent or insolvent. Where the property is solvent it would be possible to argue that it does not matter if the property is segregated as long as there is some legal obligation between the parties. Where the property is insolvent issues regarding unsecured creditors arises. Therefore if a distinction has to be made it should be between solvent and insolvent trustees. 14 In conclusion it can be seen that no trust can be formed unless it complies with the certainties. Where there is no certainty of subject matter, there can be no trust. The property would then remain with the settlor or if dead will pass by will or the intestacy rules. The trust fund must be identifiable so should be segregated from other property. However it appears there is no need to segregate if the property is intangible, segregation is only necessary in tangible property.

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