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  • 448 The Cambridge Law Journal

[1994]

conditions are t o be enforceable, or whether he was still considering the question of relevance. It is likely tha t the issue will be further litigated, if only because the device of a condition attaching t o a benefit is a useful method of circumventing the rule in Austerberry, now affirmed in Rhone v. Stephens. So, the law is unaltered: between freeholders, the burden of a positive covenant relating to land can pass neither in law nor equity. It may be inconvenient, but at least it is certain, and thus the law will remain, until Parliament takes note of the Law Commission's proposals and legislates accordingly. The mystery of section 79 persists. Only the rule in Halsall v. Brizell has been (partially) elucidated. One hopes that the legal costs incurred by the parties to this unhapp y dispute were not to o enormous.

LOUISE TEE

SHARE AN D SHARE ALIKE?

IN Hunter v. Moss [1994] 1 W.L.R. 452, Moss

was the founder of

Moss Electrical Co . Ltd., and owned 950 of the 1,000 issued shares. In September 1986 he orally declared himself trustee of 50 of his shares in favour of Hunter . It is clear on the facts, and important for purposes of analysis, tha t he did not declare himself trustee of the whole of his holding in proportion s for himself and Hunter: his remaining 900 shares were no t t o be subject to any trust. The question was whether the trust declared was void for uncertainty of subject-matter, in that Moss only quantified, and did not specify, which of his shares were subject to the trust .

At first instance ([1993] 1 W.L.R. 934) Colin Rimer Q.C., sitting as a deputy High Court Judge, had held the trust good, because the shares were legally identical, so that it did not matter which of them were th e trust property; and because, immediately after the declaration, the court could, if required, have executed the trust by requiring Moss t o convey 50 of his shares to Hunte r or his nominee. The judge distinguished authorities appearing to suggest the contrary, in particu- lar Re London Wine Co. [1986] P.C.C. 121 because there the cases of wine were potentially different one from another. Considering the matte r as of first impression in England, he cited Rollestone v. National Bank of Commerce in St. Louis (1923) 252 S.W. 394, a decision of the Supreme Cour t of Missouri on facts similar to the present case. He noted also tha t there is nothing at all remarkable in a legacy of part of a testator' s holding of shares: though the particular shares bequeathed are no t specified, the gift is good, and is a specific legacy: see for example Re Clifford [1912] 1 Ch. 29. The Court of Appeal dismissed

C.L.J. Case and Comment

449

an appeal against the trial judge's conclusions on the uncertainty point. Dillon L.J., who gave the leading judgment, specifically adopted the legacy analogy. The answer given at both levels might appear supremely sensible. Unfortunately, however, it necessarily implies some remarkably unorthodox views about the function and natur e of trusts. The function of a trust is different from that of other superficially similar institutions. A trust may last for a considerable period of time or even indefinitely; the principal function of the law relating t o trusts is to govern proprietary interests and dealings with the trust property, for the protection of the beneficiaries, during the continuance of the trust. Although the duties of personal representatives have something in common with those of trustees, the basic function of the rules of sucession is to ensure a proper and efficient distribution of property rather than to regulate its retention. Vagueness as to the specification of the subject of a legacy may well not prevent an executor making a proper distribution, but it does not follow that a similar vagueness about property which is to be subject to a trust is of no account.

Secondly, it is an essential feature of a trust that, while it continues, the trust property belongs in equity to the beneficiaries. They have proprietary interests, amounting to ownership in equity, good (subject to statute) against anybody except a bona fide purchaser of the legal estate for value without notice of those interests. In this the trust differs from parallel institutions in civil-law jurisdictions as well as from other institutions of English law. It is no t by any means apparent how the trust in Hunter v. Moss can have had this characteristic. Suppose Moss, relenting of his generosity t o Hunter, executes simul- taneous legal gifts of all 950 shares in equal portions to two bona fide transferees. The new owners not being purchasers for value, Hunter' s proprietary interest (as sole beneficiary of a trust of 50 of the shares) must survive the transfer. But it is impossible t o say which of the two transferees has the trust shares. The "tracing" rules, developed for the identification of money that has found its way into a mixed fund, are not to the point, because the shares, unlike money, have an earmark:

each has a number by which it retains its identity in any holding of which it forms part . H's shares are not "mixed" so as to be potentially traceable; he must fail in any action against the new owners because he cannot prove which of the shares are his. H's proprietary interest is illusory. It cannot be sufficient to say that he could be, or could have been, given a definite proprietary interest on application to the court. Views may differ on constructive trusts and mutual wills, but it has surely never previously been suggested tha t the beneficiary of an express trust has no real interest until a court order. H's interest in 50 unidentified shares cannot have been that of a beneficiary of a trust.

  • 450 The Cambridge Law Journal

[1994]

The decision here noted may be compared with that of the Privy Council in Re Goldcorp Exchange Ltd. [1994] 3 W.L.R. 199 (see p . 443 above). There , one of the claims was that o n purchase of unascertained bullion, title t o a n appropriate portion of the seller's holding of bullion passed t o th e buyer. Giving th e advice of th e Board, Lord Mustill cited Blackburn, writing i n 1845, that it was contrary t o "th e nature of things " for property to pass in unascertained goods, even if the sale is from stock: "th e parties did no t intend t o transfer th e property in

one portio n of th e stock more than in another, an d th e law , which gives effect t o their intention, does no t transfer th e property in any individual portion" . Lord Mustill continued by saying tha t "th e same

conclusion applies,

and for the same reason, t o any argument that a

title in equity was created by th e sale". This view must surely be preferable t o tha t adopted in Hunter v. Moss. My claim t o ownership, whether legal o r beneficial, is a nonsense unless I can say what it is tha t I own and , in consequence, tha t you don't .

MAR K OCKELTON

TARGETING TRUSTEES—LIABILITY FOR BREACH OF TRUST

So often, a trustee's lo t is no t a happy one; were confirmation needed, it is provided by tw o recent cases, Target Holdings Ltd. v. Red/ems [1994] 1 W.L.R. 1089 and Jaffrayv. Marshall [1993] 1 W.L.R. 1285.

Target proposed t o lend on th e security of

land; Redferns were its

solicitors. Target transferred t o Redferns' client account th e

loan

money, which Redferns wa s to disburse when th e firm received duly executed security documentation. In fact, th e money was paid over by Redferns before receipt of the documents, though in due course charges over th e land were received. Subsequently, Target enforced its security; th e land was sold, bu t th e proceeds were insufficient t o meet the sums secured on the land. Th e mortgagor was worthless, an d th e estate agent, which had overvalued the land, was in liquidation. Whom should Target sue? Its solicitors, of course. Target claimed tha t Redferns ha d paid away the money in its client account (held o n trust for Target) in breach of trust, an d that th e firm should restore th e trust fund to its state before th e breach. Redferns admitted th e breach, but argued it was no t a cause of Target's loss, as tha t loss would have been suffered even if the firm ha d paid the money from its client account at th e proper time. Target applied for summary judgment .

Ralph Gibson L.J. thought that, in certain cases, a payment in breach of trust might not b e regarded as a cause of loss if payment in