Tracing
2 types
Fiduciary relationship
Proprietary remedy
Equity
Common law
beneficiaries can use
breach of fiduciary relationship
origin of property to be traced
property continued existence in one form or another
Rules of Tracing
Roscoe v Winder
Re Hallet's Estate
Foskett v McKeown
Re Oat way
innocent volunteers
Clayton Case
can be seen more of a remedy than a process (Agrip v Jackson)
action based in rem
trying to be able to trace property even if change form - if money taken than used on bet or investment
only recognises legal title
beneficiaries in trust unable to use
can go into a mixed fund
preconditions
origin of property to be traced
breach by fiduciary of duties
fiduciary relationship
solicitor and client, doctor and patient, trustee and beneficiary
property came into defendants possession as a result of breaching fiduciary duty
Sinclair v Broughman can happen earlier in the chain, initial relationship between depositors and directors of society
Re Diplock a gift for trustees to distribute, nominated a fund thought was charitable, distributed 200k, not charitable, no charitable trust created so next of kin able to trace into assets of those who receive the properties
must have been trust property when came into defendants possession Lister v Stubbs
AG for Hong Kong v Reid received bribes to register property overseas, able to trace property purchased using bribe - if receive bribe need to be able to account for every penny
Lister unsatisfacotry as allows to still benefit from any increase in value of the bribe
FHR European Ventures v Seeder Capital Partners bribe, could trace asset even if purchased with bribe
Diplock
beneficiaries can chose how best to realise their claims
in breach of trust, trustee began paying own life assurance premium from trust, died prematurely = beneficiary entitled to sue if investment wasted or can choose to take a pro rata share of life assurance payment
lowest intermediary balance rule
100k in account, embezzel 300k into it from trust, place bet lost went to 50k, left 600k from elderly relative, account back to 650k - can only trace against 50k
approved in Ireland In the Matter of Custom House
PMPA could not trace funds into overdrawn account as funds dissipated
presume trustee acted honestly,
solicitor misappropriated funds, took money from trust and put into personal account, money mixed and spends some, not enough money to settle all - trustee presumed to have acted honestly and spent own money first - beneficiaries got all money left in account
took money from trust into own account, took out some money and spent it, invested some which did well, assets left in trust account wasted away, - court held - person whose rights breached given maximum opportunity to recover - entitled to shares - presumed trusteedissipated own funds
no wrongdoing but benefited
can be traced against with qualifications
if mixed in active acount clayton case rules apply
if mixed and used to purchase property beneficiaries and volunteer entitled to charge over property - will rank pari passu
first in first out
innocent volunteer bank acount, 20k put in from Trust A, 30 k from Trust B after, innocent volunteer spends 25k, since Trust A first in all of Trust wiped out and than 5 k from Trust B
if have 0 starting, Trust A adds 25k, you inherit 55k, 25k more from Trust A, innocent volunteer spends 40k, Trust A gets 25k back and innocent volunteery 50k
Barlow wont apply if leads to injustice
Barros need to be innocent to rely on it