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Tracing

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kazzasingh's version from 2018-05-03 08:34

Section

Question Answer
London Allied Holdings Ltd v Lee [2007]It is important to appreciate that in a tracing action, the claimant can trace the money ‘not because it is the claimant’s, but because it is derived from a fund which is treated as if it were subject to a charge in the claimant’s favour’
R. Goode (1976)There is no need for the plaintiff to identify his money in the defendant's hands - merely to establish that the defendant received the money.
Lipkin Gorman v Karpnale Ltd [1991]All of the money received by the ‘playboy club’ had been mixed after receipt, and some paid out, but that did not prevent the plaintiffs from suing for money had and received
Peter Millett (1991)It is not clear what happens when money is paid to a second recipient, but as the action is personal and not proprietary, what happens to the money after it has been received by the first recipient is irrelevant.
Re Montagu’s Settlement Trusts [1987]"ʺThe equitable doctrine of tracing and the imposition of a constructive trust by reason of the knowing receipt of trust property are governed by different rules and must be kept distinct. Tracing is primarily a means of determining the rights of property, whereas the imposition of a constructive trust creates personal obligations which go beyond mere property rights"ʺ.
Agip (Africa) Ltd v Jackson [1989]"ʺThe tracing claim in equity gives rise to a proprietary remedy which depends on the continued existence of the trust property in the hands of the defendant...to recover the money which the defendants have paid away the claimants must subject them to a personal liability to account as constructive trustees and prove the requisite degree of knowledge to establish liability"ʺ.
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Equitable remedies

Question Answer
Re Diplock [1948]Equitable remedies --> the personal remedy against over-paid legatees. HELD: the claimants had a right in personam in equity against the recipients, even though they were innocent volunteers who took in good faith with no notice of the next-of-kin's title.
Chase Manhattan bank NA v Israel-British Bank (London) Ltd [1981]General limitations --> Discovering a fiduciary
Re DiplockGeneral limitations --> Innocent volunteer --> The scope of innocent change of position as a defence to equitable tracing is unclear. It seems that the innocent third party is not obliged to prefer the claims of the beneficiary/principal.
Space Investments Ltd v Canadian Imperial Bank of Commerce Trust Co (Bahamas) Ltd [1986]General limitations --> Dissipation/Destruction --> “...equity allows the beneficiaries to trace the trust money to all the assets of the bank and to recover the trust money by an equitable charge over all the assets of the bank”
Pilcher v RawlingsGeneral limitations --> Equity’s Darling --> a less controversial version of the innocent party defence, is the innocent third party who is not a volunteer, but a purchaser. Such a person has an unaswerable defence to any equiable claim.
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Tracing Process at Common Law

Question Answer
Taylor v Plumer (1815)"the product of or substitute for the original thing still follows the nature of the thing itself, as long as it can be ascertained as such".
Banque Belge v Hambrouck [1921]; Lipkin Gorman v Karpnale Ltd [l991]Claims to substitute assets were upheld
Parker Tweedale v Dunbar Bank plc [1990]Trust beneficiaries cannot trace at common law, unless the trustees are able to do so on their behalf and are willing (or can be compelled) to do so
Agip Africa; Bank TejaratThe common law will trace choses in action from one person to another where they are transferred by a cheque, but not where the transfer is made electronically
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Tracing Process in Equity

Question Answer
Re Hallett’s (1880)Trustee or fiduciary mixes his own money with beneficiaries/ principal’s money. Part of the combined fund is paid away --> assumed that money remaining belongs to the beneficiaries on the principle that a trustee cannot claim to have done in breach that which he can be said to have done without a breach of trust.
Roscoe v WinderTrustee or fiduciary mixes his own money with beneficiaries/ principal’s money. Part of the combined fund is paid away --> A beneficiary is only entitled to the lowest intermediate balance in an account
Bishopsgate v Homan)Trustee or fiduciary mixes his own money with beneficiaries/ principal’s money. Part of the combined fund is paid away --> A beneficiary is only entitled to the lowest intermediate balance in an account and cannot, therefore, trace through a “nil balance”
Foskett v McKeownTrustee or fiduciary mixes his own money with beneficiaries/ principal’s money. The combined fund is used to purchase assets --> It is now established that a beneficiary will normally take a proportionate share of the assets, but can elect to take a charge for the whole amount originally misapplied.
Sinclair v Brougham(III) Trustee or Fiduciary mixes the monies of two different trusts
Vaughan v Barlow Clowes(III) Trustee or Fiduciary mixes the monies of two different trusts
Clayton’s Case (1816)(IV) ​Innocent third party mixes the monies of two different trusts in a current bank account --> the Rule in Clayton’s Case (1816) is applicable, but is usually disappplied
Re Diplock(V) ​Innocent third party mixes his own monies with those of another innocent party
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