Restitution - Tracing

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Restitution - Tracing
2013-06-04 06:13:20
Restitution Tracing

Restitution - Tracing
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  1. Common law rule
    There must have been a 'clean substitution' (no mixing)
  2. Taylor v Plumer
    P was able to trace to securities and bullions bought with his money by his agent
  3. Common law - potato investments. Trustees in bankruptcy could trace to the increased fund.
    FC Jones & Sons v Jones 1997
  4. Case - it was said that there was no need for different tracing rules in law and equity, because tracing is not a right or remedy in itself
    FC Jones & Sons v Jones 1997
  5. Common law - money was traced through three bank accounts and the remainder was recoverable.
    Banque Belge pour l'Etranger v Hambrouk 1921 - remaining money was traced to mistress's bank account. It was not mixed with other funds at any point.
  6. When can the equitable tracing rules be used?
    Where the claimant had equitable title to the original property or was owed a fiduciary duty in respect of the property.
  7. What test is to be used for a mixed fund of two innocent parties?
    • Proportionate sharing rule (sometimes with intermediate balance rule).
    • First in, first out rule (Clayton's Case) where the fund is held in a current account, UNLESS it would be inconvenient, unjust or contrary to the intention of the parties.
  8. Proportionate sharing rule - case example
    Sinclair v Brougham - ultra vires banking business wound up. Depositors could recover a share of the fund proportionate to their original contributions.
  9. First in, first out rule (case)
    Clayton's Case 1816
  10. Case - first in first out rule used for funds held in current accounts, proportionate sharing used for everything else.
    Re Diplock 1948
  11. Exception to the Clayton's Case rule
    Barlow Clowes v Vaughan 1992 - proportionate sharing rule should be used where the first in first out rule would be inconvenient, unjust, or contrary to the intentions of the parties (Lord Woolf)
  12. Barlow Clowes v Vaughan 1992
    Investment company liquidated. Money was held in current account, but Clayton's Case rule would not be appropriate - fund was intended to be held as a common investment. Proportionate sharing rule used instead.
  13. Case - it was said that the Clayton's Case rule was now more the exception than the norm, proportionate sharing was more appropriate for beneficiaries with shared misfortune.
    Russell-Cooke v Prentis 2002
  14. If the mixed fund of an innocent beneficiary and a wrongdoing fiduciary declines in value...
    The fiduciary bears the loss first, there is a presumption that he would act honestly and use his own money before the beneficiary's - Re Hallett's Estate 1880
  15. The Re Hallett's Estate presumption does not apply where the withdrawal has been profitably invested
    Re Oatway 1903 - beneficiary could trace to shares bought with fund (the rest of the fund had been dissipated)
  16. If mixed fund of beneficiary and fiduciary increases in value, the innocent beneficiary can claim a proportionate share of the proceeds.
    Foskett v McKeown 2001 - trust money used to pay life insurance premiums, beneficiaries could trace to proportionate share of payout.
  17. If the money is paid into an overdrawn bank account, the fund is exhausted and tracing stops
    Bishopsgate Investment Management v Homan 1995 - claimant could not get an equitable charge over D's assets, the fund had been exhausted.
  18. Birks' view on tracing
    There is only one unified tracing regime - tracing is neutral as to rights, there is no need for it to distinguish between law and equity
  19. Dr Smith's view on Taylor v Plumer 1815
    The case is used to show tracing in common law but this is an illusion, the court was actually using equitable tracing principles.
  20. Goff and Jones' view on the equitable tracing rules
    They should be available to anyone who can show a substitution
  21. Lord Atkins said obiter that the common law and equitable rules should be fused
    Banque Belge 1921