Mini Revision

The Three Certainties: Problem Question: IRAC

Intro: Knight v Knight as to three certainties. They are: Certainty of Intention

Certainty of Subject Matter and Certainty of Objects

Examine dispositions in turn as to the presence or absence of the three

certainties. Support your argument with the relevant case law. Compare,
contrast and distinguish cases.

Conclusion
Revisit dispositions. State on what grounds they fail, if so.
Mini Revision

Charities: Problem Question: IRAC

Intro: Identify the area of law: Charities/Charitable Purpose Trusts

Examine dispositions in turn as to charitable purposes.

What kind of Charity?
Public benefit requirement: 2 meanings- Poor relations? Personal Nexus?
Political Purposes?
Is the purpose wholly and exclusively charitable?
Support your argument with the relevant case law. Compare, contrast and distinguish cases.

Conclusion
Revisit dispositions. State on what grounds they fail, if so.
Mini Revision
Family Home Trusts: Essay Question

Intro: Be innovative! Meaning of Home

Main Body: 3 main points

1st Main Point: Sole ownership Cases eg: Eves v Eves, Gissing v Gissing, Petitt
v Petitt, Grant v Edwards etc explain Lloyds Bank v Rosset
2nd Main Point: Joint ownership cases: Stack v Dowden, Jones v Kernott other
jurisdictions
3rd Main Point: Criticisms

Conclusion
Breach of Trust and Third-Party
Liability Problem Question
IRAC

Intro

Define Breach of Trust: Apply the relevant case law to the facts
Define Dishonest Assistance: Apply the relevant case law to the facts
Define Knowing Receipt: Apply the relevant case law to the facts

Conclude/Advise
Tracing: At Last!
Tracing: At Last!

Defining tracing: Tracing is a method of recovering property when it has

been obtained involuntarily.

This means without the owner’s consent. No agreement in other words to

any transfer of title in that property to the defendant.

Tracing arises in situations where the property has been misappropriated,

as a result of breach of trust or taken by mistake.
Tracing: How does it operate?

Tracing operates on three levels.

The first level: The owner wants to recover the original property from the
defendant (authentic identity)

Second level: original property plus profits

Third level: Impossibility of recovery of the original property due to mixture

with other property, or it cannot be found or good faith purchase by
someone else (identity transformation)
Tracing: How does it operate?
Explanations as to potential problems

The first level: The owner wants to recover the original property from the
defendant (authentic identity)

Fairly straightforward:

A matter of fact and Proof

Merely Following
Tracing: How does it operate?
Explanations as to potential problems

The Second level: original property plus profits

Not that straightforward:

Following Property Rights

Into something that I did

Not actually have rights

previously
Tracing: How does it operate?
Explanations as to potential problems

The Third level: Impossibility of recovery of the original property due to

mixture with other property, or it cannot be found or good faith purchase
by someone else (identity transformation)

Way more complicated:

Proper Tracing not merely

following
Tracing: Its kinds and Categories

There are two types of tracing

Tracing at Common Law

Tracing in Equity
General Distinctions

Following and tracing Distinction:

Lord Millett in Foscett v McKeown

“The processes of following and tracing are however distinct. 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”
General Distinctions

Tracing is a process not a remedy

Boscawen v Bajwa

LJ Millett again: “ Tracing properly so called, however, is neither a claim nor

a remedy but a process. It is the process in which the plaintiff traces what
has happened to his property… He needs to do this because his claim is
based in the retention by him of a beneficial interest in the property which
the defendant handled or received”
Tracing at Common Law

Common law tracing is the process by which the claimant can identify that
a particular property item belongs to him or her at common law.

Certain requirements:

The claimant must show that the property is the original property intact
and unchanged

The property has not been mixed with other property

Tracing at Common Law: Relevant
Case Law
Lipkin Gorman v Karpnale

Facts: A partner, solicitor uses money from the client’s account to gamble
at the casino! The casino keeps some money separately in an account for
the partner. The law firm seeks to recover the money paid to the casino as
it had come from the client’s account.

Held: They could claim in common law tracing since the money had not
been mixed with other funds
Tracing at Common Law: Relevant
Case Law
Stark contrast to Lipkin

Agip Africa v Jackson

Facts: Accountants take money from the plaintiff by means of forged

payment orders. Money laundering purpose. The money moved through
companies to a number of bank accounts in other currencies and
jurisdictions. The plaintiffs take action at common law tracing.

Held: The common law tracing would have been available had the money
been kept separately and had the plaintiffs been able to prove that it was
exactly the same money wrongfully taken from the trust fund.
Tracing at Common Law: Limitations

It follows from the cases examined above that there are a number of
limitations

1 if the property becomes unidentifiable: No common law tracing

2 if the property is mixed with other funds: No tracing at common law

Party time for money-launderers!

Tracing at Common Law: possibilities
and New Directions
There are also some possibilities
FC Jones & Sons v Jones
Facts: Loan to the wife of one of the partners Ms Jones, of £11,700. She
invests it in potato futures she makes a large profit. New bank account
balance £49,860 kept separately. The company had gone bankrupt before
the money was transferred to Ms Jones. The question was whether or not
the Official Receiver was entitled to the £11,700 or to the whole amount
including the profit.

Held: The Official Receiver was entitled to the whole amount

Important decision as it seems that the scope of common law tracing is

being expanded upon.
Tracing in Equity

Tracing in Equity is the only process available that a claimant can trace
into mixtures of property, where a part of that mixture represents or
comprises money in which the claimant previously held some form of
equitable interest.

Requirement for a successful claim: Pre-existing Equitable interest

Tracing in Equity: Relevant Case law

The traditional Rule: Need for a Prior Equitable Interest

Boscawen V Bajwa

Facts: Incomplete contract of sale of land. How Abbey National was to claim the
money back since there was an incomplete sale? Was the bank able to trace into the
debt of Bajwa?

Held: Yes!

Millett with the rationale: equity’s power to charge mixed fun with the repayment of
trust moneys enables the claimant to follow the miney, not because it is his but
because it is derived from a fund which is treated as if it were subject to a charge in
his favour.
Tracing in Equity: The Benefits of
Equitable tracing
The benefits of equitable tracing go beyond tracing at common law

Agip Africa v Jackson

Held: Either principal or agent can sue on the equitable tracing claim,
furthermore the plaintiff in this case could trace the money in equity and
into the defendant’s hands.
Tracing in Equity: Limitations of
Equitable tracing
Electronic Bank Accounts Issues

Bishopsgate Investment Management v Homan

Facts: Pension funds money was taken. Between the time the action was
brought and the payment of the money into bank accounts, the money
had been passed into other bank accounts that had gone overdrawn. On
the basis that the accounts were overdrawn the beneficiaries had lost their
right to trace into the accounts.
Tracing in Equity: Mixed Funds

This concerns situations where the trustee mixes money taken from the
trust with property that is his/her own.

The honest Trustee Approach

Re Hallett’s Estate:

Held that where a trustee is paying money out of their bank account mixed
with trust money it should be assumed that they pay out of their own
money and not from the trust fund.

However: Re Oatway
Tracing in Equity: Payments made
through Current Bank Accounts
What if the fund containing the mixed property is used to acquire separate
property.

First in first out Rule: Clayton’s case

Accounting rules, however the rationale is that the money that was
deposited first is presumed to be used first.
Tracing through Electronic Bank
Accounts
Problem with establishing proprietary rights in amounts of money held in
electronic bank accounts

The usual distinction between tangible and intangible

Westdeutsche Landesbank Girozentrale v Islington LBC

Stolen bag of coins analogy by Lord Borwne-Wilkinson: once a bank

account goes overdrawn or the money is spent that money is perceived as
gone disappeared.

Tangible Approach to property law