ABSTRACT
Tracing at common law Foskett v McKeown (2001) ‘Following is the process of following the same asset from hand to hand. Tracing is the process of identifying a new asset as a substitute for the old’ Taylor v Plumer (1815) Property can be traced at common law where there has been a clean substitution of the property and it has not been mixed with other property Boscawen v Bajwa (1996) Monies lent for the redemption of a mortgage and used for other purposes could be traced through subrogation into the hands of the purchaser who had been unjustly enriched at the expense of the mortgagees Trustee of the property of FC Jones and son (a fi rm) v Jones (1996) A claimant could trace into property at common law and was entitled to claim any profi t derived from that profi t Banque Belge pour L’etranger v Hambrouck (1921) There can be common law tracing into a bank account if the funds have not been mixed with other moneys
Tracing in equity Re Hallet’s Estate (1880) Where a trustee or fi duciary has mixed funds with those of his own then he is deemed to use his own money fi rst and the benefi ciaries are entitled to a charge on the fund to satisfy their claim Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (1986) The right to trace was dependent on proof that the trustees were in breach of trust or breach of fi duciary duty Foskett v McKeown (2001) A claimant in equity is entitled to either claim a proportionate share of the asset or to enforce a lien over it Re Oatway (1903) The benefi ciaries’ claim must fi rst be satisfi ed from any identifi able part of the mixed fund before the trustees could claim any part of it for him/herself. Re Tilley’s Wills Trust (1967) The benefi ciaries have the choice whether to claim a charge over the asset or to claim for a proportional increase in the value of the asset Roscoe v Winder (1915) It is only possible to trace into the lowest intermediate balance left in the account Re Goldcorp (1994) Assets which have not been segregated from the whole cannot be traced Bishopsgate Investment Management Ltd v Homan (1994) There can be no backwards tracing into a fund unless it can be shown that a loan was always going to be repaid with the misappropriated money Clayton’s Case (1816) The fi rst money in will be deemed to be the fi rst money out in a current account comprising money of an innocent volunteer and/or two or more trust accounts Barlow Clowes International Ltd and Others v Vaughan and others (1992) Re Diplock (1948) The ‘fi rst in fi rst out’ rule in Clayton’s case can be ignored where it would cause injustice and the court were entitled to apply pari passu
Key Facts Lord Millett: ‘Following is the process of following the same asset as it moves from hand to hand. Tracing is the process of identifying a new asset as the substitute for the old…’.
