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

Plaintiff must be able to identify the property in

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plaintiff must be able to identify the property in the hands of a defendant What about if the defendant misappropriates trust funds and then buys another asset? What rights does the plaintiff have in relation to this ‘substituted’ asset? Tracing is the name given to the process which allows a plaintiff to claim a proprietary right over that substituted asset
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10 Tracing cont. Complications arise where the property has been mixed with other assets e.g. if the D mixes assets from more than one trust fund What about an innocent third party? Can a plaintiff trace into their hands? Tracing is required where the asset has changed form or changed hands
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11 When Tracing is Necessary You might need to trace in these cases: Defendant takes property and exchanges it for another asset Defendant takes property and mixes it with own property Defendant transfers property to a 3 rd party You may also need to trace where the defendant takes property from 2 innocent parties, mixes it and purchases an asset
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12 What Claimant has to show Claimant has to identify property in defendant’s hands as: The original asset A substituted asset Mixed asset
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13 Tracing Requirements for tracing in equity: A pre-existing proprietary right (for us – arising out of a breach of trust/fiduciary duty); Ability to identify the property in the hands of the defendant Property must be ascertainable (though mixing does not prevent this); Property must not be dissipated; If tracing into the hands of a 3 rd party, they must not be a BFPfVw/oN
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14 Tracing – questions to ask Need to work out: What is the claim i.e. what type of fiduciary breach? What is the property? Who has the property? What has happened to it? Passed from owner to owner Changed form Been mixed
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15 Mixing and Identity If the original misappropriated asset is still in the hands of the D the plaintiff can assert ownership of the asset If the original asset is substituted for a new asset the P can seek a proprietary remedy over the new asset via tracing Where the asset is mixed with other assets or has been given/sold to a third party it gets more complicated
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16 Mixing Cases We’ll look at cases in relation to: 1. Mixing with the defendant’s own property Foskett v McKeown (2001,HL) Brady v Stapleton (1952, HC) Scott v Scott (1962, HC) 2. Mixing and third parties Re Diplock (1948, HL)
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17 Foskett v McKeown  [2001]  Case shows the difference between tracing and following – we’ll use the term tracing only Majority held the investors funds were to be regarded as being paid into a mixed fund This meant the investors were entitled to a proportionate share in the proceeds of the life insurance policy on maturity The case was decided on proprietary interests only, not on exercise of discretion
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18 Principles from  Foskett When payments are made into a mixed fund,
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