Hunter V Moss

I pass then to the second point of uncertainty. It is well established that for the creation of a trust there must be the three certainties referred to by Lord Langdale in Knight v. Knight (1840) 3 Beav. 148 . One of those is, of course, that there must be certainty of subject matter. All these shares were identical in one class: 5 per cent. was 50 shares and the defendant held personally more than 50 shares.

It is well known that a trust of personalty can be created orally. We were referred to the well known passage in the judgment of Turner L.J. in Milroy v. Lord (1862) 4 De G.F. & J. 264 , 274–275, where he said: “I take the law of this court to be well settled, that, in order to render a voluntary settlement valid and effectual, the settlor must have done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him.

He may of course do this by actually transferring the property to the persons for whom he intends to provide, and the provision will then be effectual, and it will be equally effectual if he transfers the property to a trustee for the purposes of the settlement, or declares that he himself holds it in trust for those purposes; and if the property be personal, the trust may, as I apprehend, be declared either in writing or by parol; but, in order to render the settlement binding, one or other of these modes must, as I understand the law of this court, be resorted to, for there is no equity in this court to perfect an imperfect gift.

The cases I think go further to this extent, that if the settlement is intended to be effectuated by one of the modes to which I have referred, the court will not give effect to it by applying another of those modes. If it is intended to take effect by transfer, the court will not hold the intended transfer to operate as a declaration of trust, for then every imperfect instrument would be made effectual by being converted into a perfect trust.” In the present case there was no question of an imperfect transfer. What is relied on is an oral declaration of trust.

Again, it would not be good enough for a 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. It is plain 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.

Mr. Hartman sought to dispute that and to say that if, for instance, a shareholder had 200 ordinary shares in I.C.I. and wanted to give them to A, B, C and D equally he could do it by giving 200 shares to A, B, C and D as tenants in common, but he could not validly do it *458 by giving 50 shares to A, 50 shares to B, 50 shares to C and 50 shares to D, because he has not indicated which of the identical shares A is to have and which B is to have. I do not accept that. That such a testamentary bequest is valid, appears sufficiently from In re Clifford [1912] 1 Ch. 29 and In re Cheadle [1900] 2 Ch. 620 .

It seems to me, again, that if a person holds, say, 200 ordinary shares in I.C.I. and he executes a transfer of 50 ordinary shares in I.C.I. either to an individual donee or to trustees, and hands over the certificate for his 200 shares and the transfer to the transferees or to brokers to give effect to the transfer, there is a valid gift to the individual or trustees/transferees of the 50 shares without any further identification of their numbers. It would be a completed gift without waiting for registration of the transfer: see In re Rose [1952] Ch. 499 .

In the ordinary way a new certificate would be issued for the 50 shares to the transferee and the transferor would receive a balance certificate in respect of the rest of his holding. I see no uncertainty at all in those circumstances. Mr. Hartman, however, relied on two authorities in particular. One is a decision of Oliver J. in In re London Wine Co. (Shippers) Ltd. [1986] P.C.C. 121 which was decided in 1975.

That was a case in which the business of the company was that of dealers in wine and over a period it had acquired stocks of wine which were deposited in various warehouses in England. Quantities were then sold to customers by the company, but in many instances the wine remained at the warehouse. There was no appropriation — on the ground, as it were — from bulk, of any wine, to answer particular contracts.

But the customer received from the company a certificate of title for wine for which he had paid which decribed him as the sole and beneficial owner of such-and-such wine of such-and-such a vintage. The customer was charged for storage and insurance, but specific cases were not segregated or identified. Subsequently, at a stage when large stocks of wine were held in various warehouses to the order of the company and its customers, a receiver was appointed by a debenture holder. The question that arose was whether the customers who had received these certificates of title had a good title to the quantity of wine referred to in the certificate as against the receiver appointed under a floating charge.

The judge held that it could not be said that the legal title to the wine had passed to individual customers and the description of the wine did not adequately link it with any given consignment or warehouse. And, furthermore, it appeared that there was a lack of comparison at the time the certificates were issued in that, in some cases, the certificates were issued before the wine which had been ordered by the company had actually been received by the company. It seems to me that that case is a long way from the present. It is concerned with the appropriation of chattels and when the property in chattels passes.

We are concerned with a declaration of trust, accepting that the legal title remained in the defendant and was not intended, at the time the trust was declared, to pass immediately to the plaintiff. The defendant was to retain the shares as trustee for the plaintiff. Mr Hartman also referred to a case of Mac-Jordon Construction Limited [pic] v [pic] Brookmount Erostin Limited (1991) 56 BLR 1, a decision of this court.

The position there was that Mac-Jordon were sub-contractors for Brookmount as main contractors. There was retention money kept back by Brookmount which, on the documents, was to be held on a trust for the sub-contractors, but it had not been set aside as a separate fund when a receiver was appointed by the main contractor, Brookmount's, bank. It was, consequently, held that Mac-Jordon was not entitled to payment in full of the retention moneys in priority to the receiver and the secured creditor. It was common ground in that case that, prior to the appointment of the receivers, there were no identifiable assets of Brookmount impressed with the trust applicable to the retention fund.

At best, there was merely a general bank account. In reliance on that case Mr Hartman submits that no fiduciary relationship can attach to an unappropriated portion of a mixed fund. The only remedy is that of a floating charge. He refers to a passage in the judgment of Lord Greene MR In re Diplock (1948) 1 Ch 465 at the foot of 519 where he said: "The narrowness of the limits within which the common law operated may be linked with the limited nature of the remedies available to it ...

In particular, the device of a declaration of charge was unknown to the common law and it was the availability of that device which enabled equity to give effect to its wider conception of equitable rights." So Mr Hartman submits that the most that Mr [pic] Hunter [pic] could claim is to have an equitable charge on a blended fund. He mentions the decision of Chitty J decision in In re Earl of Lucan 45 Ch 470 which points out that, where there was merely an equitable charge which did not grant perfect and complete rights to the chargee and it was given by way of gift to a volunteer, there could be no specific performance in favour of the volunteer who would have no priority over the creditors of the grantor.

As I see it, however, we are not concerned in this case with a mere equitable charge over a mixed fund. Just as a person can give, by will, a specified number of his shares of a certain class in a certain company, so equally, in my judgment, he can declare himself trustee of fifty of his ordinary shares in MEL or whatever the company may be and that is effective to give a beneficial proprietary interest to the beneficiary under the trust. No question of a blended fund thereafter arises and we are not in the field of equitable charge.