Tracing

Question 1

Boscawen v Bajwa

Answer 1

Tracing is not claim by the process by which the claimant justifies his claim that the money which D handled or received can be regarded as representing his own property

Question 2

Foskett v McKeown

Answer 2

Tracing is the process of identifying a new asset as the substitute for the old
Beneficiary can claim proportionate share of mixed asset or secure personal claim as security
Trust property mixed with innocent volunteer’s pre-owned asset - can execute proprietary lien equal in value to loss suffered

Question 3

Agip (Africa) v Jackson

Answer 3

Mixing will defeat common law tracing

Question 4

Re Diplock

Answer 4

Common law tracing - personal not proprietary remedy
Requirements for equitable proprietary tracing:
1) Fiduciary relationship between claimant and wrongdoer - may be imposed by courts
2) Equitable proprietary interest in the property
Inequitability will defeat equitable tracing (limited to facts)
Dissipation = food (once consumed), ongoing expenses, aesthetic property improvements or unsecured debts (includes paying off overdraft)
Innocent contributors must share rateably in asset purchased (pari passu) - applies to savings accounts
Personal Diplock Action (compensation only - principle sum and simple interest) where money is wrongly paid out in administration of an estate
1) Must sue personal representatives first
2) Restricted to underpaid legatees under an estate

Question 5

Banque Belge v Hambrouck

Answer 5

Equitable tracing is more flexible - ‘common law halted outside the banker’s door but equity had the courage to lift the latch, walk in and examine the books
Equitable tracing is not defeated by mixed funds

Question 6

Re Hallett’s Estate

Answer 6

Unmixed fund - beneficiary can claim property or take charge over asset
Mixed fund - can take equitable charge/lien as security for personal claim
Fiction trustee has acted honestly and spent his own money before trust money

Question 7

Re Tilley’s WT

Answer 7

Mixed funds - can take a proportion of the asset (including profit)

Question 8

Re Oatway

Answer 8

Can rebut presumption of honesty if bought valuable asset and dissipated remainder

Question 9

Turner v Jacob

Answer 9

Re Oatway confined to cases of total dissipation - if sufficient assets remain to cover the claim, the presumption of honesty stands (probably distinguishable)

Question 10

Shalson v Russo

Answer 10

Beneficiary has choice as to whether to rebut presumption of honesty as long as the contest is just between him and wrongdoer

Question 11

Roscoe v Winder

Answer 11

Lowest intermediate balance - property deposited by trustee must be treated as his own (never belonged to beneficiary) unless clear intention to reimburse trust fund

Question 12

Re Clayton’s Case

Answer 12

Current account -first in, first out rule

Question 13

Commerzbank Aktiengesellschaft v IMB Morgan

Answer 13

First in, first out presumption can be rebutted if it would result in injustices (usually does)

Question 14

Charity Commission v Framjee

Answer 14

Re Clayton probably still the default rule

Question 15

Lipkin Gorman v Karpnale

Answer 15

Defence of change of position can be used against personal Diplock actions (obiter)

1) Property must be used on exceptional expenditure
2) Good faith - must believe money belongs to you

Question 16

Re Montague’s ST

Answer 16

Personal Diplock action not available to beneficiaries of a trust