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Tracing II (Mixed funds (C's property mixed with trustee's…

- - - - "The beneficiary is entitled at his option either to claim a proportionate share of the asset or to enforce a lien upon it to secure his personal claim against the trustee for the amount of the misapplied money" - per Lord Millett
      - Can now take proportion of current value depending on how much put it - usually better
    - - Rebuttal of presumption - Re Oatway (1903) - presumption of honesty won't be used against beneficiary's interest - aka if money used first is for valuable share and the rest is dissipated - ask if property purchased is worth retaining
        
        Recent developments
        
        "Cherry picking" - Shalson v Russo (2003) - when in competition with the wrongdoer, it is up to the claimant to "cherry pick" assets from everything bought since the money was deposited - applies even when there are sufficient funds left in account - in line with Foskett idea of providing every advantage to the beneficiary
        
        Turner v Jacob (2006) - specific case relating to applied trust of the home - no real legal changes
      - Rule relating to deposits
        
        Roscoe v Winder (1913) - "lowest intermediate balance" - beneficiary cannot claim trustee's money when deposited into trust bank account, unless clear evidence that intended to repay beneficiaries - can only claim the amount that was there before they deposited their own funds
        
        Confirmed in Bishopsgate Investment Management Ltd v Homan (1995)
  - - - Deposit account - shared rateably (pari passu) - Re Diplock (1948); Sinclair v Brougham - basically anything but a current account
        
        Look at proportion going in - apply to anything that goes out
      - Active current account - first in first out rule - Re Clayton's Case (1816) - whoever's money goes in first comes out first - unfair if one has more value - disliked by the courts
        
        Barlow Clowes International Ltd v Vaughan (1992) - situation now - won't apply first in first out rule if...
        
        Contrary to express/implied intentions of claimants
        
        Impractical
        
        Would cause injustice
        
        Also see Commerzbank Aktiengessellschaft v IMB Morgan Plc and Others (2004); National Crime Agency v Robb (2014
  - - - If no - dissipation
      - If yes, proprietary lien to recover money expended - Foskett v McKeown (2001) - not fair to take advantage of increase
        
        Subject to inequitable defence - Diplock confined to facts - charity would have had to sell existing assets to repay
- - - - Must sue wrongdoer first - can only sue recipient once that claim is exhausted
      - Receive principle sum only - plus simple interest
      - No current defences - change of position may apply in future - Lipkin Gorman v Karpnale Ltd (1991)
      - Not available to beneficiary under a trust - Re Montagu's ST (1987)
  - - - Used to reverse unjust enrichment - Banque Financiére De La Cité v Parc (Battersea) Limited (1999) - when secured debt paid off with stolen funds (e.g. mortgage)
        
        Bank classed as a bona fide purchaser without notice - but can resurrect the debt so trustee owes to claimant - claimant then has the same rights as any mortgagee
        
        Boscawen v Bajway (1995) - referred to change in position defence
- - - - 1) Fiduciary relationship
      - 2) Equitable proprietary interest
      - Permitted tracing into mixed funds - rules developed for dealing with