Please enable JavaScript.

Coggle requires JavaScript to display documents.

Tracing I (Equitable proprietary tracing (Advantages (Significantly more…

- - - - "...the common law halted outside the banker's door, but equity had the courage to lift the latch, walk in and examine the books" - per Atkin LJ in Banque Belge v Hambrouck (1921)
    - - However if know you have a claim and don't bring action, cannot do so later - in this way may actually have less time than with CL
  - - - Wider than trustee-beneficiary relationship
        
        Chase Manhattan Bank NA v Israel-British Bank Ltd (1981)
        
        Westdeutsche Landesbank Girozentrale v Islington LBC (1996) - requirement approved in this case, though criticised in Foskett v McKeown (2000)
        
        "[the fiduciary requirement is] readily satisfied in most cases of commercial fraud, since the embezzlement of a company's funds almost inevitably involves a breach of fiduciary duty on the part of one of the company's employees or agents" - per Millett J in Agip Ltd v Jackson (1990)
        
        Relationship does not have to be between the claimant and the defendant - Re Diplock - claimant must show a fiduciary relationship either between herself and the defendant or between herself and the person who transferred the property to the defendant - here was between the executors of an estate and the next of kin even those claim was against the charities who had received the traceable proceeds
        
        Established rule that property cannot be traced into the hands of a bona fide purchaser for value without notice, but can be traced into the hands of an innocent volunteer
    - - Equitable interest under a trust
      - Equitable interest of beneficiaries under an estate
  - - - In good faith and without knowledge, but no consideration
    - - i) Received the property in good faith
      - ii) Has no knowledge that it represents the traceable proceeds of a breach of trust
      - iii) Has provided consideration
  - - - Re Diplock (1948)
      - Foskett v McKeown (2001)
    - - Dinner
      - Ongoing expenses
      - "Aesthetic" property improvements
      - Overdrawn bank account - Bishopsgate Investment Management v Homan (1995)
      - Unsecured debts
- - - - Relevant to the solvency of the defendant - ranked the same as any unsecured creditors
  - - - Expensive process - once the property has been identified it is still necessary to make a claim in respect of that property - if defendant is solvent then claimant may do better with a personal claim - same if right cannot be traced or is now worthless
    - - Generic term often used to describe separate process of following and tracing - following identifies the same asset as it moves - tracing identifies a new asset as the substitute for the original - more useful
- - - - However mere fact that the defendant has spent the money does not render it inequitable as might have occurred anyway in the ordinary course of things
    - - Funds mixed with wrongdoer's funds in bank account - NOTE funds paid into an account won't automatically defeat CL tracing, mixing will
      - Difficult not to mix with modern banking practices - Agip (Africa) Ltd v Jackson (1990) - money mixed into the New York clearing system
      - Other limitations
        
        Legal proprietary base - not helpful for beneficiaries making claim for breach
        
        Absence of the "far-reaching remedy of a declaration of charge" (Re Diplock [1948] ) - result is usually a personal remedy - can claim against the person at the end of the chain - if claimant is the legal title holder and the property is an item, them CL tracing may be appropriate