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Law Second Year > Property Law - Following and Tracing > Flashcards

Property Law - Following and Tracing Flashcards

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1
Q

Who noted Turner v Jacob is probably closer to what Oatway decided?

A

H&M

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2
Q

What did Conaglen say of backwards tracing?

A

It is a matter of legal policy on whether to allow backwards tracing

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3
Q

What case showed court recognising tracing is the court ‘making a policy judgment’ of whether one asset represents or is substituted for another?

A

Federal Republic of Brazil v Durant International

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4
Q

What is often unclear in cases of mixed substitution?

A

Evidence of where the money has gone or come from

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5
Q

What is the lowest intermediate balance rule?

A

If evidence clearly shows only £200 in the account could belong to B, this is all B can claim.

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6
Q

What does a claim depend on?

A

C’s right to the original asset

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7
Q

Relfo v Varsani general

A

Money laundering, one transaction

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8
Q

What case conflicts with Foskett on backwards tracing and how?

A

Re Tilley’s WT - intention not needed

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9
Q

What can a B do if there is a mixed substitution?

A

Trace into and claim proportion of traced asset, or lien to secure a personal claim against T

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10
Q

C is entitled ALMOST as of right to an interim freezing injunction to preverse claimed asset until trial outcome

A

UCB Home Loans v Grace

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11
Q

Relfo v Varsani required what for backwards tracing?

A

Prior arrangement that trust fund would be used to repay, and was so used

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12
Q

How did Lionel Smith view backwards tracing?

A

Should be allowed - look at what made release of debt caused by initial borrowing possible, such that if money is borrowed to buy a car, and X can only repay the debt through money from B, money from B explains X’s ownership

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13
Q

If T mixed his own money with trust money, who has priority?

A

B

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14
Q

What judge in what case called Clayton the exception, not the rule?

A

LJ Cooke in Russell-Cooke Trust v Prentis

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15
Q

Sinclair Investments v VTF

A

Once trust money falls into a ‘black hole’, such that it is impossible to trace due to complex transactions, T bears the burden of showing money is not part of the trust fund

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16
Q

What is following?

A

Identifying the same asset from hand-to-hand

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17
Q

UCB Home Loans v Grace

A

C is entitled ALMOST as of right to an interim freezing injunction to preverse claimed asset until trial outcome

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18
Q

Barlow Clowes v Vaughan general

A

Ponzy scheme

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19
Q

Why did Clayton not apply in Barlow Clowes v Vaughan?

A

Investor intention clearly to share in profits and losses

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20
Q

What did the Vice-Chancellor say in Foskett v McKeown in the CoA?

A

Important D made the first payment, giving his children a vested interest and meaning B could only claim for misappropriated funds

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21
Q

What did Conaglen highlight as a reason not to allow backwards tracing?

A

Unsecured creditors are already in a precarious position compared to the far better protected position of Bs

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22
Q

Turner v Jacob judgment

A

If there is money left, B must start from the money

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23
Q

If T gives money to a BFP, who has priority?

A

BFP - claim extinguished

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24
Q

LJ Woolf in Barlow Clowes on Clayton

A

Only use if it does ‘broad justice’

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25
Q

What kind of remedies are falsifying and surcharging?

A

Personal

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26
Q

What judge in what case suggested Clayton does not apply if ‘inconvenient’?

A

Lord Greene in Re Diplock

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27
Q

What jurisdiction was Federal Republic of Brazil v Durant?

A

CoA of New Jersey

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28
Q

Who noted they couldn’t overrule Clayton, but could displace it with a counterweight, and in what case?

A

LJ Dillon in Barlow Clowes

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29
Q

Space Investments v Canadian Imperial Bank general

A

Swollen assets theory

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30
Q

What other method could be used for bank accounts than pari passu or Clayton?

A

Rolling charge

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31
Q

Lord B-W in Foskett

A

Windfall is permitted because enforcement of property rights, not to reverse UE

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32
Q

Beaver skins, mistress

A

Jones v De Marchant

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33
Q

Who outlined the ‘black hole’ theory in Sinclair Investments v VTF?

A

Lord neuberger

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34
Q

What did Lord Steyn say in Foskett of the equitable/legal distinction of tracing?

A

Process of identification is ‘genuinely neutral as to the right exigible’

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35
Q

What two judges were in the minority in Foskett?

A

Steyn and Hope

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36
Q

What was the split in the HoL in Foskett?

A

3:2

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37
Q

What case applies if there is evidential certainty in a tracing claim?

A

Roscoe v Winder

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38
Q

Turner v Jacob

A

Balance

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39
Q

What do L&O note about Turner v Jacob?

A

Probably closer to what Oatway decided

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40
Q

Foskett v McKeown general

A

Portugal development, insurance policy

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41
Q

Evidential uncertainty in tracing is resolved how?

A

Against the wrongdoer

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42
Q

What case showed the courts accepting rolling charge is probably the fairest method for bank accounts?

A

Charity Commission v Framjee

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43
Q

From what case and judge does the swollen assets theory come?

A

Space Investments v Canadian Imperial Bank, Lord Templeman OBITER

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44
Q

What did Hobhouse LJ say in Foskett in the CoA?

A

Payment of 4th and 5th made no difference

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45
Q

Jones v De Marchant judgment

A

Required to account to his wife for the 18 beaver skins

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46
Q

What are the three rules (cases) in the case of mixed substitution with evidential uncertainty?

A

Re Hallett’s Estate; Re Oatway; Shalson v Russo

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47
Q

Why can’t money in a bank account be followed?

A

It is not physical money, but a debt

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48
Q

Foskett v McKeown on backwards tracing, and what judge?

A

Scott VC said only allowed if C can prove T intention at time of borrowing was to repay with trust money

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49
Q

Roscoe v Winder

A

Lowest intermediate balance

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50
Q

In what case did the CoA reject Clayton for mixed substitution and evidential uncertainty?

A

Re Hallett’s Estate

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51
Q

Re Hallett’s Estate general

A

Mix, dissipation, balance

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52
Q

Re Hallett’s Estate judgment

A

Presume T spent his money first because presumption of honesty

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53
Q

Why do L&O prefer Shalson?

A

For Rimer J’s view of the merits

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54
Q

What types of substitutions can there be in a tracing claim?

A

Mixed and clean

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55
Q

What judge in Bishopsgate said no to backwards tracing because fallacious?

A

LJ Leggatt

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56
Q

Who criticised Millett’s reference to ‘tracing the value’ in Foskett and why?

A

If understood to mean market value, it is nonsense to say you are tracing the value because it may not be the same

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57
Q

Who called Clayton’s case ‘capricious, arbitrary and apposite’, and in what case?

A

LJ Leggatt in Barlow Clowes

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58
Q

Foskett v McKeown judgment

A

B’s payments were swapped for ‘shares’ in policy - proportional share of pay-out with children

59
Q

What case shows an exception to the specification doctrine?

A

Jones v De Marchant

60
Q

Clayton’s Case

A

First in first out rule

61
Q

What case explained why the money is considered dissipated upon paying into an overdrawn account?

A

Rea v Russell

62
Q

Why did LJ Leggett say no to backwards tracing?

A

Fallacious

63
Q

If both sources in a mixed substitution are innocent, who has priority?

A

Pari passu

64
Q

When can there not be a lien in the case of mixed substitution?

A

If there are innocent competing contributors

65
Q

What case suggests a similar theory to swollen assets but ISN’T?

A

Sinclair Investments v VTF

66
Q

What two cases stand in conflict under evidential uncertainty for mixed substitution in tracing?

A

Turner v Jacob and Shalson v Russo

67
Q

Russell-Cooke Trust v Prentis

A

LJ Cooke called Clayton the exception, not the rule

68
Q

How did they reason the allowance of backwards tracing in Federal Republic of Brazil v Durant?

A

If not allowed because of transaction order, would allow camouflage of interconnected transactions to obscure true purpose and effect

69
Q

what did Millett say of pro rata in a mixed substitution case?

A

It is the ‘best that the wrongdoer and his donees can hope for’

70
Q

Lord Hope in Foskett

A

Contributions made a difference by reducing costs to insurer, but no difference to rights exercisable by children

71
Q

What is the general rule for dissipation?

A

If money is used to pay an unsecured debt or pay into an overdrawn account, the money has dissipated and end of tracing

72
Q

What did the CoA require in SFO v Lexi Holdings?

A

Equitable charge to attach to traceable proceeds

73
Q

Lord Steyn in Foskett

A

Contributions made no difference, so not pro rata

74
Q

Relfo v Varsani judgment

A

Looked at surrounding circumstances to find many transactions were actually one

75
Q

What two subsequent cases tried to limit the effect of Clayton?

A

The Mecca and Re Sherry

76
Q

SFO v Lexi Holdings

A

Rejected obiter in Space Investments

77
Q

What is a mixed substitution?

A

New asset acquired with a mixture of misapplied trust property and T’s own property

78
Q

Charity Commission v Framjee

A

Rolling charge probably the fairest method, but never applied in English law. Open to adopt it, but used pari passu

79
Q

Who said to only use Clayton if it does ‘broad justice’?

A

LJ Woolf in Barlow Clowes

80
Q

How do H&M try to explain Millett’s use of the term value in Foskett?

A

Connotes the potential for exchange inherent in an assignable right

81
Q

How do L&O argue Templeman’s swollen assets theory is wrong?

A

Misread Jessel MR’s judgment in Re Hallett’s that when trust funds are mixed ‘the whole will be treated as trust property’ - only meant to concern particular account

82
Q

What two cases rejected the rolling charge method?

A

Barlow Clowes v Vaughan; Russell-Cooke Trust v Prentis

83
Q

What two cases suggest courts are more willing to allow backwards tracing in recent years?

A

Relfo v Varsani; Federal Republic of Brazil v Durant

84
Q

What judge in Shalson v Russo said no to backwards tracing?

A

LJ Rimer

85
Q

What judge failed to bring clarity to the law by his judgment in Bishopsgate v Homan?

A

LJ Henry

86
Q

Millett in Foskett

A

No equitable/legal distinction in tracing, rejected confinement to a lien and pro rata

87
Q

What judge in Bishopsgate v Homan allowed backwards tracing?

A

LJ Dillon

88
Q

What case is an example of money used to pay into an overdrawn account?

A

Bishopsgate v Homan

89
Q

What judge in Foskett rejected legal/equitable distinction in tracing

A

Millett

90
Q

What case showed the courts open to adopting rolling charge method?

A

Charity Commission v Framjee

91
Q

What does T have against a bank for the money in his account?

A

A chose in action

92
Q

What is a non-fungible mixture?

A

Mixture is specific so you can tell what happened to the original property

93
Q

What is the swollen assets theory?

A

B can trace into all assets T has when T wrongfully takes money for himself, subjecting all his assets to a charge

94
Q

What is a clean substitution for tracing?

A

One asset is swapped directly for misapplied trust property

95
Q

Who said following and tracing are ‘exercises in locating assets which are taken to represent the trust asset’?

A

Lord Millett in Foskett v McKeown

96
Q

What is the rolling charge method?

A

Look at each transaction to determine what happens to each investor at each point

97
Q

If one source in a fungible mixture is a wrongdoer, and some is given away, what happens?

A

B has priority

98
Q

Why did Millett say pro rata distribution?

A

Later events cannot determine ownership of a policy

99
Q

Why did Barlow Clowes and Russell Cooke reject rolling charge?

A

Prohibitive costs and complications

100
Q

what judge rejected confinement to a lien in mixed substitution cases, and in what case??

A

Millett in Foskett

101
Q

Rea v Russell

A

NZ CoA show how there is no new asset when paying into an overdrawn account, so no proprietary representation

102
Q

From what jurisdiction is the rolling charge method?

A

America

103
Q

What are following and tracing?

A

Evidentiary processes

104
Q

Re Oatway judgment

A

Assume T preserve B’s assets first so can claim investment

105
Q

Jones v De Marchant general

A

Beaver skins, mistress

106
Q

What did Millett say of CoA argument in Foskett?

A

‘Capricious and unacceptable’

107
Q

Re Oatway general

A

Mix investment, dissipation

108
Q

Foskett v McKeown, per Lord Millett on following and tracing

A

They are ‘exercises in locating assets which are taken to represent the trust asset’

109
Q

If 3rd is a volunteer without notice (but not BFP), and doesn’t mix, who has priority?

A

B

110
Q

If two innocent sources contribute to a fungible mixture, and some is given away, what happens?

A

Both share proportional to their shares

111
Q

What do H&M say of the reference to ‘value’ by Millett in Foskett?

A

‘Misguided and distracing’

112
Q

Shalson v Russo general

A

Cherry pick

113
Q

What case shows an example of money used to pay an unsecured debt?

A

Re Diplock

114
Q

Clayton only applies to current accounts, not saving

A

The Mecca

115
Q

What two types of mixtures may there be in a following process?

A

Fungible and non-fungible mixtures

116
Q

what three judges were in the majority in Foskett?

A

Hoffmann, Millett and Lord B-W

117
Q

What did L&O say of the court response to Clayton?

A

Courts are swift to find impracticality or injustice so it doesn’t have to be applied

118
Q

What judge in Foskett highlighted how the windfall is permitted because it is the enforcement of property rights, not to reverse UE

A

Lord B-W

119
Q

How is Space Investments inconsistent with Roscoe?

A

Presumption should only be made against wrongdoer when there is evidential uncertainty

120
Q

What are two exceptions to the general rule on dissipation?

A

If debt is secured by a charge over D’s property, or if D borrows money to buy an asset, and trust money is used to repay the creditor

121
Q

If T gives money to 3rd with notice, and 3rd mixes, who has priority?

A

B

122
Q

Re Sherry

A

If money is paid on the same day, deal with it as though done at the same time, NOT Clayton

123
Q

What judge in Re Tilley’s WT said intention is irrelevant for backwards tracing?

A

Ingoed-Thomas J

124
Q

Federal Republic of Brazil v Durant International on tracing

A

Jersey CoA recognised it is the court ‘making a policy judgment’ of whether one asset represents or is substituted for another

125
Q

Who said pro rata in a mixed substitution case is the ‘best that the wrongdoer and his donees can hope for’?

A

Millett in Foskett

126
Q

What was the view taken in Federal Republic of Brazil v Durant?

A

Look at overall transaction for coordinated scheme

127
Q

In what circumstances was LJ Dillon willing to allow backwards tracing in Bishopsgate v Homan?

A

Inference or intention to repay debt with trust money

128
Q

What did Lord Greene say of Clayton’s Case in Re Ziplock?

A

Bank accounts are complicated so the rule is useful, based on ‘presumed intention’ and if inconvenient, pari passu

129
Q

What is the rule in Clayton’s Case?

A

First in first out - first lot of money attributed to first transaction out, ad infinitum

130
Q

What judge in Re Hallett’s Estate suggested B is confined to a lien when substitution is mixed?

A

Jessel MR

131
Q

If money is paid on the same day, deal with it as though done at the same time, NOT Clayton

A

Re Sherry

132
Q

With what case is Space Investments v Canadian Imperial Bank inconsistent?

A

Roscoe

133
Q

When would tracing/following be preferred to a personal claim?

A

If T is bankrupt, to establish a proprietary interest and gain priority

134
Q

Lord Hoffmann in Foskett

A

Agreed with Millett (but not on unit)

135
Q

What is the starting point for bank accounts?

A

Clayton’s case

136
Q

What is tracing?

A

Identifying the new asset swapped for the original asset, identifying the value of the old one in the new asset

137
Q

What two reasons are there for not following Turner v Jacob and preferring Shalson v Russo?

A

Shalson not cited to Patten in Turner; wrongdoer shouldn’t take advantage of his own wrongdoing

138
Q

Who gave the priority rules in a tracing claim, and in what case?

A

Lord Greene MR in Re Diplock

139
Q

The Mecca

A

Clayton only applies to current accounts, not saving

140
Q

What is a fungible mixture?

A

Mixture compose of mutually interchangeable units, so it doesn’t matter what part of the mass you are talking about

141
Q

Shalson v Russo judgment

A

B can ‘cherry pick’ between Hallett and Oatway if balance and investment

142
Q

In what three situations is B’s asset considered destroyed in a non-fungible mixture?

A

Physically attached to dominant, such that it would be disproportionately expensive to separate the two, a fixture with the same effect or combined to create a new product under ‘specification’ doctrine

143
Q

If 3rd is a volunteer without notice (but not BFP), and does mix, who has priority?

A

Pari passu

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