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17 Cards in this Set

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Re Diplock

The right to trace may be lost if the property is used to pay debts or where tracing is inequitable. FACTS: A charity was mistakenly given funds as part of a will; the original recipients asked for the money back.

Losing the right to trace

When was a change of position made permissible to stop tracing in equity?

Following Lipkin v Karpnale, this defence stops tracing if receipt of the property (in good faith) has changed D's personal circumstances. Bad faith will invalidate the defence however

Lipkin v Karpnale

What are the rules regarding mixed accounts and tracing?

Money can be traced even if mixed with the defendants own money. The rule is that the claimant can only claim the remaining funds. However, to combat this, the claimant can enjoy a lien over the property respective to the percentage of which his own money went towards it OR a respective beneficial ownership

Re Hallett

The claimant has the right to trace even if the money has been mixed with D's own funds

Tracing in Mixed Accounts

Re Oatway

Despite the claimant only being entitled to D's remaining balance, C can enjoy a lien over the newly purchased property

Tracing in mixed accounts

Can money be traced into a mixed account at common law (legal title instead of equitable)

Yes! Since Lipkin where the money was withdrawn and paid over at a casino, trustees can also trace into mixed accounts

What is the difference between tracing at common law and in equity?

Common law deals with trustees while equity deals with beneficiaries. However, since a successful trace can allow legal or equitable proprietary rights to be enforced, minus the issue on fiduciary relationships, there is seemingly no difference between the two.

What is the concept of tracing not being a claim nor a remedy?

The idea is that tracing simply identifies what had been done with the original property, with the new property being the original in another manifestation. This view was followed in Ultraframe, and Sinclair v Versailles

Lord Millet in Foskett and Birks

What is the difference between tracing and following according to Lord Millet?

Tracing identifies a new asset as a substitute for the old whilst following tracks down the same asset as it changes from hand to hand

What relief is given to a trustee in breach under s.61 Trustee Act 1925?

If the breach is thought to be honest and reasonable, then there may be partial or total relief of the claim

Difference between personal and proprietary actions?

Proprietary actions are for those who actual had interest in the property and are getting it back. Personal actions are claims for money lost and will not be available if D defaults, unlike proprietary claims

What is a constructive trustee? And are unconscionable recipients such?

They are dishonest actors who must return the funds and perform their job properly. However Williams v Central Bank of Nigeria declared that unconscionable recipients will not be such

What is involved in the vindication of property rights?

The beneficiary can assert their interest in the stolen property or its traceable proceeds provided it is not in the hands of a bona fide purchaser for value without notice

Foskett v McKeown

What is the proprietary claim for unconscionable receipt?

The claimant can assert his right over the property or its substitute. If this is impossible, then a personal remedy is the next option

Lewiston J in Ultraframe

What is the debate regarding fiduciary duties for tracing?

The argument is as to whether this requirement is still necessary. Foskett and El Ajou have condemned it while Westdeustche have affirmed it. Meanwhile, Shalson v Russo highlight that Foskett did not expressly ban the requirement. Nonetheless it is easy to satisfy as seen in Agip v Jackson

What are the three conditions required to trace in equity?

1. There must be a fiduciary relationship (questionable)

2. There must be a beneficial interest in question.

3. The right to trace must not be lost which is possible when a) the property cannot be identified, b) bonafide purchase for value without notice, c) inequitable, d) used to pay off debt, e) When there is a change of position

What is meant by a change of position?

When the recipient has received the property in good faith, and tracing will alter greatly their personal circumstances (although the degree is unspecified) If D has acted in bad faith, this defence is no longer available

Means to stop a right to trace