Re Harvard Securities [1997]
Share
Re Harvard Securities Ltd [1997] EWHC 371 is an English trusts law case that addresses the certainty of subject matter in a trust. The case establishes that, under English law, clients can have a beneficial interest in shares without the need for segregation if there is an identifiable arrangement specifying the class and quantity of shares.
The liquidator of Harvard Securities Ltd, a stockbroking company, sought a determination under the Insolvency Act 1986 to ascertain whether the company or its clients held a beneficial interest in shares held by the company. The company bought blocks of Australian or US shares, selling them to clients in parcels. While the legal title remained with the company, it acted as a nominee for each client. However, the parcels were not individually registered in the clients' names. The company went insolvent, leading to a dispute over the clients' beneficial interest in the shares.
Neuberger J held that English law applied to the US shares, and the clients did have a beneficial interest in the shares. He rejected the need for segregation, relying on the principles established in Hunter v Moss [1994]. Neuberger J emphasised that, in principle, a valid declaration of trust could involve a percentage of shares held on trust, similar to the reasoning in Hunter v Moss [1994]. However, he noted that, in this case, unidentified shares in a class were treated as beneficial property. He concluded that if the correspondence had specified the number of shares, the clients would have had a beneficial interest. Consequently, the clients did have an interest in the US shares, and the liquidator was allowed to sell the shares and account to former clients pro rata.
Neuberger J addressed the distinction between Hunter v Moss [1994] and other cases, noting that Hunter v Moss [1994] was concerned with shares and not chattels. He argued that the shares in Hunter v Moss [1994] were treated similarly to a debt or fund, and this distinction influenced the decision. He further clarified that the description of shares as "an unascertained part of a mass of goods" did not fit cases involving shares, making the shares more comparable to a debt or fund.
Re Harvard Securities Ltd clarified the application of Hunter v Moss [1994] in cases involving shares, emphasising that the identification of shares by class and quantity in an arrangement could establish a beneficial interest without the need for segregation. The decision contributed to the understanding that the principles in Hunter v Moss [1994] extended beyond tangible property and were applicable to intangible property, such as shares, in certain circumstances.
The liquidator of Harvard Securities Ltd, a stockbroking company, sought a determination under the Insolvency Act 1986 to ascertain whether the company or its clients held a beneficial interest in shares held by the company. The company bought blocks of Australian or US shares, selling them to clients in parcels. While the legal title remained with the company, it acted as a nominee for each client. However, the parcels were not individually registered in the clients' names. The company went insolvent, leading to a dispute over the clients' beneficial interest in the shares.
Neuberger J held that English law applied to the US shares, and the clients did have a beneficial interest in the shares. He rejected the need for segregation, relying on the principles established in Hunter v Moss [1994]. Neuberger J emphasised that, in principle, a valid declaration of trust could involve a percentage of shares held on trust, similar to the reasoning in Hunter v Moss [1994]. However, he noted that, in this case, unidentified shares in a class were treated as beneficial property. He concluded that if the correspondence had specified the number of shares, the clients would have had a beneficial interest. Consequently, the clients did have an interest in the US shares, and the liquidator was allowed to sell the shares and account to former clients pro rata.
Neuberger J addressed the distinction between Hunter v Moss [1994] and other cases, noting that Hunter v Moss [1994] was concerned with shares and not chattels. He argued that the shares in Hunter v Moss [1994] were treated similarly to a debt or fund, and this distinction influenced the decision. He further clarified that the description of shares as "an unascertained part of a mass of goods" did not fit cases involving shares, making the shares more comparable to a debt or fund.
Re Harvard Securities Ltd clarified the application of Hunter v Moss [1994] in cases involving shares, emphasising that the identification of shares by class and quantity in an arrangement could establish a beneficial interest without the need for segregation. The decision contributed to the understanding that the principles in Hunter v Moss [1994] extended beyond tangible property and were applicable to intangible property, such as shares, in certain circumstances.
