Tracing Flashcards
What is tracing?
NOT a remedy.
The process by which the claimant identifies what has happened to his property and who has received or handled it.
Boscawen v Bajwa.
Why is it preferable to trace in equity?
Common law tracing only applies where claimant has legal title and the property is identifiable and unmixed (Agip v Jackson).
Why are proprietary remedies preferable?
Claimant gets priority over general creditors on insolvency.
Claimant gets increase in the value of the property
No statutory limitation period.
What are the requirements for tracing in equity?
A fiduciary relationship (readily found e.g. even in the case of mistaken payments - Chase manhattan Bank v Israel British Bank)
An equitable proprietary interest in the property.
What does an equitable proprietary interest include?
beneficiaries under a trust or under a will (Re Diplock).
Whose hands can property not be traced into?
A bona fide purchaser for value without notice.
What are the options where the claimant’s property has been mixed with the trustees?
Proportionate share (allowing beneficiary to take any increase in value) or an equitable lien (property as security for original losses) Foskett v McKeown.
What were the options for a claimant whose property was mixed with a trustee’s before Fosett v McKeown?
Equitable charge for amount of money misappropriated (Re Hallet)
Proportionate share (Re Tilley’s WT).
What is the outcome for a claimant whose property is mixed with another trust fund or innocent volunteer’s?
Costs are shared rateably (pari passu)
Re Diplock; Folket v McKeown.
What happens if the claimant’s property is mixed with an innocent volunteer’s pre-owned asset?
If mixing adds value to pre-owned asset then claimant is entitled to a charge over the property (NOT a proportionate share) - Foskett v McKeown.
If it does not, it is dissipated and cannot be traced.
If claimant’s property is mixed with an innocent volunteer’s pre-owned asset, what may be available to the innocent volunteer?
Inequitability defence (Re Diplock) - although confined to the facts fo this case - forced to sell off pre-existing assets to pay the debt and large sum of money (~12mn).
Doubted by Lord Millet in Re Diplcok
Boscawan v Bajwa.
For bank accounts what happens where the claimant’s property is mixed with the trustee’s?
Presumption of honesty (Re Hallet)
Rebut presumption if later payments dissipated and first money spent on something traceable and no funds left in account to repay claimant (re Oatway).
Cherry pick if sufficient funds left (Shalson v Rosso).
What is the in and out rule?
lowest intermediate balance rule - if defendant spends beneficiaries money, any money paid into his account from his own funds cannot be used to repay the beneficiary unless intention to make a gift.
Roscoe v Winder.
What happens if the claimant’s money is mixed with an innocent volunteer’s or another trust fund?
First locate defendants money using either presumption of honesty, rebuttal or cherry picking.
Then consider whether the money is in a current or deposit account.
What happens if the claimant’s money is mixed with an innocent volunteer’s or another trust fund in a deposit account?
Any payments out of the fund are shared rateably.
Re Diplock
