Topic%204%20-%20Part%203%20-%20Property%20Rights%20%26%20Tracing%20-%20v2

The plaintiff is entitled at his option to elect to

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the plaintiff is entitled, at his option, to elect to claim either a: CT over his proportionate share of the asset; or personal remedy secured by an equitable lien As the asset here had substantially increased in value, a CT was more attractive
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19 Foskett  cont.  Pg 425 CM Lord Millett states an asset is mixed when the plaintiff’s property has contributed in part only towards the acquisition of the new asset It does not matter if the money is physically mixed, or if separate payments are made, as in Foskett The plaintiff can trace even into the hands of an innocent third party who receives the asset pg 427 CM
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20 Brady v Stapleton  (1952) C transferred 32,280 shares to Brady, as trustee for C B held 1300 shares in the company of his own C was declared bankrupt B transferred 17,000 shares to Mrs. C – she had notice of the trust Identification of individual shares belonging to B & C impossible – lower court held shares not to be transferred to trustee in bankruptcy because impossible to identify C’s shares
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21 Dixon CJ and Fullagher J The fact that the property is unable to be precisely identified is no excuse for not granting a remedy – to refuse a remedy places the burden on the wrong party Concerned with mixing of trust property with indistinguishable units belonging to another – fact remains that they are all shares in the name of B Equities are not defeated by the mixing – if it is still practicable the court will give a remedy by appropriating to the P a specific severable part of the available property
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22 Scott v Scott    (1962) - Equitable Lien Misappropriated trust funds used to buy a family house Years later, prior to his death he repaid the trust the money he had misappropriated Were the beneficiaries entitled to any of the increase in the value of the property? High Court granted an equitable lien for the increase in the value of the house in the same proportion as the trust had contributed to the value for the purchase
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23 What do those 3 cases tell us? Where there is mixing with the defendant’s own property then the proprietary remedies of CT/lien are available, provided the tracing rules apply The P should make an election for a CT or an equitable lien Recall that a P will seek a CT to gain an increase in value and a lien where the asset has decreased in value
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24 Tracing into the hands of a third party A claimant may be able to trace into the hands of third party The P can trace property into: A volunteer – a person who has given no value for the asset (may have notice/no notice); or A third party who has notice of the misappropriation of property (under the rule in Barnes v Addy) If knowledge is present then both options are available
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25 Third Parties & Mixing -  Re Diplock What happens where the trustee has passed property to an innocent third party who has mixed property with their own?
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