There are many situations, particularly in trade finance, where a borrower needs to be
able to charge or assign part of a debt or an asset (e.g. part of a shipment) to one
financier and part to another. Similar consideration also apply to financial
intermediaries dealing in dematerialised shares or securities on behalf of clients through
a single client account.
Prior to the case of Hunter v Moss (1994) a charge or assignment of part of an asset or a
debt was impossible because the courts could not distinguish between the charged part and
the non charged part. Hunter v Moss overturned that theory and held that if all parts of
the asset or debt were identical it did not really matter which part was charged as long
as there was enough in the whole to satisfy the charge.
Hunter v Moss has been heavily criticised and the Privy Council in Re Goldcorp Exchange
Limited (1994) declined to follow it in respect of bullion. As a result Hunter v Moss has
been confined to applying only to intangible assets such as debts rather tangible assets
such as shipments of wheat (which would now be covered by the Sale of Goods (Amendment)
Act 1995). However, the case has now been followed in Hong Kong in re CA Pacific
Securities Ltd. That case concerned whether clients of a stockbroker which had gone into
insolvency had any rights to shares purchased on their behalf by the broker and held in a
securities account with a custodian. The Hong Kong applying Hunter v Moss held that the
clients did have rights to the shares in the securities account.
This Hong Kong case is useful in respect of stockbrokers and other financial
intermediaries. There is an English case on the same point, Re Harvard Securities Limited
(in liquidation) (1997), however, that case provides only tepid support for the decision
in Hunter v Moss.