Proprietary claims Flashcards
What is a proprietary claim?
Where the trust seeks return of trust property or substitute property.
What are the tracing rules?
If the trustee sells the property and purchases something else, the trust can assert a proprietary claim against the new asset so long as it can identify the asset represents the trust property.
What is the limitation period for a proprietary claim?
No limitation period exists.
They are subject to the doctrine of Lachs, which depends on what the trustee has done with the property.
What happens if the trust property has dissipated?
No claim is possible as the property no longer exists.
What happens if the trustee retains the original property?
A direct proprietary claim can be made.
What happens if the trustee purchases substitute property?
They can claim the new property and benefit from its increase in value.
If there is a decrease in value, a lien may be placed to recover the loss.
What happens if there mixed assets?
A lien may be placed on any decrease in value or a proportional share can be claimed on any increase in value.
What is the rule on mixed funds in personal bank accounts?
Hallett’s - Assumes the trustee spends their own money first
Oatway’s - Allows the trust to claim the most valuable assets purchased.
What is the rule on mixed funds from different trusts?
Clayton’s case - first money in first money out
BUT
a court may depart from this to prevent injustice (Barlow).
