Restitution of Unjust Enrichment Case List for the Examination Room in 2019
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Tracing Is a Process Not a Remedy
Tracing - Scenario 1(b): Trustee Mixes Trust Money - Tracing is a process not a remedy. With His Own In His Account, subsequently - It allows us to identify a new asset as the purchases property with some money in the substitute for the old (Foskett v McKeown). account, then exhausts remaining money. - Tracing follows the value of the beneficiaries - SOLUTION: Re Oatway: We get an property, not the property itself (following). exception to the rule in Hallett’s estate: if the wrongdoer purchased assets which still exist, Distinguishing Tracing; Following & Claiming then it is presumed that he did so with the - Following is the process of following the same stolen money and the beneficiaries are asset as it moves from hand to hand. entitled to the assets. - Claiming refers to the process of recovering property, or the substitute for that property (This - Scenario 1(c): Trustee Mixes Money With His refers to the Barnes v Addy; knowing receipt, Own In His Account, and makes payment in knowing assistance doctrine - MUST and out of that account. CONSIDER THIS AFTER TRACING). - SOLUTION: Lofts v McDonald: Lowest Intermediate Balance Rule: trust cannot claim more than the lowest intermediate balance Tracing at Common Law - credited to the wrongdoer’s bank account Tracing is not unique to equity, however at CL it - If it went up from the lowest point, that is requires that the property you are tracing is not the trust’s money. identifiable, giving rise to problems with banks. - - Although you are deprived of a proprietary Equity has developed rules for identifying remedy, not personal remedies. -
Claims Against Third-Party Recipients of Trust Property
Cambridge Law Journal, 76(2), July 2017, pp. 399–429 © Cambridge Law Journal and Contributors 2017. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http:// creativecommons.org/licenses/by-nc-sa/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. doi:10.1017/S0008197317000423 CLAIMS AGAINST THIRD-PARTY RECIPIENTS OF TRUST PROPERTY DAVID SALMONS* ABSTRACT. This article argues that claims to recover trust property from third parties arise in response to a trustee’s duty to preserve identifiable property, and that unjust enrichment is incompatible with such claims. First, unjust enrichment can only assist with the recovery of abstract wealth and so it does not assist in the recovery of specific property. Second, it is difficult to identify a convincing justification for introducing unjust enrich- ment. Third, it will work to the detriment of innocent recipients. The article goes on to show how Re Diplock supports this analysis, by demonstrating that no duty of preservation had been breached and that a proprietary claim should not have been available in that case. The simple conclusion is that claims to recover specific property and claims for unjust enrichment should be seen as mutually exclusive. KEYWORDS: trusts, third parties, proprietary claims, knowing receipt, res- titution, unjust enrichment, Re Diplock. I. INTRODUCTION According to orthodox trust principles, where property is transferred in breach of trust, a beneficiary can either bring a proprietary claim to recover the property or a personal claim against a knowing recipient of the trust property (hereinafter, the combination of these two claims will be referred to as the “equitable regime”). -
Landmark Cases in Tracing – a Pitch
Landmark Cases in Tracing – A Pitch Landmark Cases in Tracing A pitch for an edited collection of in-depth case analyses Dr Derek Whayman, Newcastle University. [email protected] Prof Katy Barnett, University of Melbourne. [email protected] Theme and Justification Tracing is a process and claim used for recovering misappropriated property, mainly that originally held on trust or by a corporation. It allows claimants to recover not only the original misappropriated property, but also its substitute – what the property was exchanged for in a subsequent transaction. Since this claim is a right of property, it brings the claimant the advantage of priority over other creditors in insolvency and access to any increase in value, either in the property itself or from the substitute. If the property is passed to or from another person or, say, a shell company, the right to claim follows that property and is not left on the person. From this, it is no wonder it is popular with claimants. However, tracing is still under-researched and under-theorised. There is little agreement as to how this claim can be justified theoretically, what its limits are and how they vary in accordance with the multitude of different facts the courts have seen and will see in the future. Academics and judges are still feeling their way around its fundamental questions. Yet not only are the answers to these theoretical questions controverted, they go to the heart of what every litigant wants to know: what may or may not be claimed? These questions are of fundamental importance on a practical basis too. -
Claims Against Third-Party Recipients of Trust Property
Cambridge Law Journal, 76(2), July 2017, pp. 399–429 © Cambridge Law Journal and Contributors 2017. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http:// creativecommons.org/licenses/by-nc-sa/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. doi:10.1017/S0008197317000423 CLAIMS AGAINST THIRD-PARTY RECIPIENTS OF TRUST PROPERTY DAVID SALMONS* ABSTRACT. This article argues that claims to recover trust property from third parties arise in response to a trustee’s duty to preserve identifiable property, and that unjust enrichment is incompatible with such claims. First, unjust enrichment can only assist with the recovery of abstract wealth and so it does not assist in the recovery of specific property. Second, it is difficult to identify a convincing justification for introducing unjust enrich- ment. Third, it will work to the detriment of innocent recipients. The article goes on to show how Re Diplock supports this analysis, by demonstrating that no duty of preservation had been breached and that a proprietary claim should not have been available in that case. The simple conclusion is that claims to recover specific property and claims for unjust enrichment should be seen as mutually exclusive. KEYWORDS: trusts, third parties, proprietary claims, knowing receipt, res- titution, unjust enrichment, Re Diplock. I. INTRODUCTION According to orthodox trust principles, where property is transferred in breach of trust, a beneficiary can either bring a proprietary claim to recover the property or a personal claim against a knowing recipient of the trust property (hereinafter, the combination of these two claims will be referred to as the “equitable regime”). -
Remodelling Knowing Receipt As a Gains-Based Wrong
Whayman D. Remodelling Knowing Receipt as a Gains-Based Wrong. Journal of Business Law 2016, 7, 565-588. Copyright: This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of Business Law following peer review. The definitive published version is available online on Westlaw UK or from Thomson Reuters DocDel service. Date deposited: 12/09/2016 Embargo release date: 01 September 2017 This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License Newcastle University ePrints - eprint.ncl.ac.uk Remodelling Knowing Receipt as a Gains-Based Wrong Derek Whayman* [email protected] Newcastle Law School Newcastle University 21–24 Windsor Terrace Newcastle upon Tyne NE1 7RU Abstract This article analyses the nature of knowing receipt. It finds its previous characterisations as a form of unjust enrichment or trustee-like liability wanting in the face of newer authority and complex commercial situations. It argues that knowing receipt is a gains-based profit- disgorging wrong and this best describes its remedies. 1. Introduction The action in knowing receipt is an invaluable tool in the armoury of the claimant who wants to recover misapplied trust or company property from a stranger to the trust or fiduciary relation. It might be that the trustee or fiduciary is a man of straw or has disappeared or simply that the recipient is easier to sue. Then, provided the claimant can show that the recipient beneficially received property traceable to a breach of trust of fiduciary duty with cognisance of that breach, a personal claim exists.1 However, the precise nature of knowing receipt and particularly how this translates into the remedy available – namely quantum – is contested. -
Questions Concerning Third Party Recipient Liability in Equity and Unjust Enrichment
‘THE RECEIPT OF WHAT?’: QUESTIONS CONCERNING THIRD PARTY RECIPIENT LIABILITY IN EQUITY AND UNJUST ENRICHMENT JOACHIM DIETRICH∗ AND PAULINE RIDGE† [This article argues that equitable recipient liability should not be displaced by a strict liability claim in unjust enrichment. Furthermore, recent judicial and academic suggestions to the contrary fail to engage in a proper analysis of the requisite elements of either claim. In particular, the questions of whether there has been a ‘receipt’ of trust property and whether proprietary relief is available have been glossed over. To demonstrate the complexity and confusion surrounding both the equitable and unjust enrichment claims the article considers (against the backdrop of proprietary claims reliant on the priority/tracing rules) the application of equitable recipient liability and unjust enrichment theory to a simple fact scenario and then more complex variations. It is argued on doctrinal and policy grounds that equitable fault-based liability best reconciles the competing claims of the beneficiary of a trust or fiduciary relationship, and the third party recipient of trust property. The High Court of Australia, in its recent decision of Farah Constructions Pty Ltd v Say-Dee Pty Ltd, reached similar conclusions on a number of key points.] CONTENTS I Introduction............................................................................................................... 48 II An Overview of Possible Claims in Equity.............................................................. 51 III General -
Obligation and Property in Tracing Claims
CORE Metadata, citation and similar papers at core.ac.uk Provided by Newcastle University E-Prints Obligation and Property in Tracing Claims Derek Whayman* [email protected] Newcastle Law School Newcastle University 21–24 Windsor Terrace Newcastle upon Tyne NE1 7RU Abstract Tracing is said to be merely a process and separate from claiming. It is then characterised as a set of pure property identification rules which cannot vary from claim to claim. However, the development of tracing in equity relied heavily on the fiduciary obligation to support its rules. While many of tracing’s rules can be justified independently of the fiduciary obligation or rationalised as evidential presumptions, others cannot. This means it is impossible to detach the process from the claim. Furthermore, it would be undesirable to do so because it would reduce the flexibility of tracing. Introduction Tracing, according to the present conventional wisdom, is a process used to support a number of separate, mostly proprietary, claims. “[A] clear distinction must be drawn between the rules of following and tracing, which are essentially evidential in nature, and rules [of claiming] which determine substantive rights.”1 Any peculiarities of the claim should remain there and not fall in the rules of tracing. All tracing does is make the link – it identifies where the value is, whether it passes through a link between old property and its new substitute and to what extent. For example, if I spend £100 on a vase, tracing only says that the vase is subject to any claim that the £100 was. -
Knowing Receipt and the Law of Restitution
467 Recovery of Misappropriated Trust Money From Third Parties: Knowing Receipt and the Law of Restitution S R Scott* Introduction A strength of the law of restitution is that it provides a means to reconsider existing rights and remedies. One area that restitution lawyers are turning their attention to, is the recovery of one's money from a third party. Two claims in particular - the commonlaw claim of'money had and received' and the equitable claim of 'knowing receipt', are attracting their attention. Assume that I steal your money and give it to another - the 'third party'. Through the medium of money had and received you may be able to recover the value of the money from the third party. The knowing receipt claim also facilitates the recovery of money from a third party, but in slightly different circumstances. This is when the'thief' is a trustee, the money is misappropriated trust money, and the plaintiff is the beneficial owner. Notwithstanding this general similarity, these claims operate in different ways. The focus of money had and received is on the third party's receipt of the plaintiff's money. The third party's knowledge is relevant only for determining the availability of defences, such as change of position. Subject to defences, a successful claim culminates in an order that the third party repay the value of the plaintiff's money actually received. Turning to the knowing receipt claim, while there is disagreement as to the state of knowledge that a third party must have, the orthodox view is that knowledge is a prerequisite. -
Tracing in the Age of Restitution 377
2003 Tracing in the Age of Restitution 377 TRACING IN THE AGE OF RESTITUTION MARGARET STONE∗ AND ALISTAIR MCKEOUGH∗∗ Restitution is a remedy by which a plaintiff may recover a benefit, enrichment or value that the defendant has obtained at the expense of the plaintiff. Although variously described as a right, a remedy and a mechanism, tracing is generally accepted as being more in the nature of a process1 and is a precursor to the assertion of a personal or a proprietary claim either at common law or in equity.2 Described in general terms, it is a process for identifying value that the defendant has received, whether or not in the form of specific assets, and establishing a link between that value and the plaintiff. Essentially, tracing and restitution are directed to the same issue.3 Expressed at a level of generality sufficient to comprehend both doctrines, the issue is the position of a person at whose expense another person has been benefited in circumstances where, for one or other reason, it is unjust that the beneficiary should retain the benefit. Both doctrines are directed to vesting that benefit, in some form or other, in the person at whose expense it was obtained and are limited to that benefit or to its equivalent value.4 The value of the benefit (be it property or otherwise) may be greater or less than the loss suffered or the expense occasioned and thus they differ from compensatory remedies which are directed to restoring the person’s former position irrespective of whether any benefit was received by the party obliged to make compensation or the value of any such benefit.5 ∗ Judge, Federal Court of Australia. -
And Turner V Jacob (2006)
Landmark Cases in Tracing A Sample Chapter Re Tilley’s Will Trusts (1967) and Turner v Jacob (2006) Derek Whayman, Newcastle University: [email protected] 1. Introduction Many landmark cases have, if not grand facts, rather grand parties to them. This is a consequence of many of them having been decided a century or more ago, where, in practice, the services the courts provided were to mainly the wealthy and often grand. A case in point is seen in the first chapter of this (proposed) collection concerning Kirk v Webb (1698),1 which features a cast of post-restoration senior clergy, aristocrats and of course Barbara Palmer, Countess of Castlemaine, perhaps the most notorious of Charles II’s mistresses, and their son. The parties in Re Tilley’s Will Trusts (1967)2 and Turner v Jacob (2006)3 are from a time where the middle class had sufficient wealth and opportunities to invest, and our interest in these cases arises because their protagonists did not structure their investments – at least legally – wisely. Moreover, in Turner v Jacob we see a remarkable and thoroughly modern woman in Dorothy Turner in the events leading up to the case, one whose acts and intentions, it seems, influenced a modern court of equity to apply the law very carefully in a manner sensitive to her position. That these decisions are controversial in recent times is another piece of evidence supporting the proposition that equity in general, and tracing in particular, are still searching for their fundamental principles even today. For this reason, we must also look to the rather less grand- looking cases and those lower down in the hierarchy of the courts. -
Claims Against Third-Party Recipients of Trust Property
Cambridge Law Journal, 76(2), July 2017, pp. 399–429 © Cambridge Law Journal and Contributors 2017. This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike licence (http:// creativecommons.org/licenses/by-nc-sa/4.0/), which permits non-commercial re-use, distribution, and reproduction in any medium, provided the same Creative Commons licence is included and the original work is properly cited. The written permission of Cambridge University Press must be obtained for commercial re-use. doi:10.1017/S0008197317000423 CLAIMS AGAINST THIRD-PARTY RECIPIENTS OF TRUST PROPERTY DAVID SALMONS* ABSTRACT. This article argues that claims to recover trust property from third parties arise in response to a trustee’s duty to preserve identifiable property, and that unjust enrichment is incompatible with such claims. First, unjust enrichment can only assist with the recovery of abstract wealth and so it does not assist in the recovery of specific property. Second, it is difficult to identify a convincing justification for introducing unjust enrich- ment. Third, it will work to the detriment of innocent recipients. The article goes on to show how Re Diplock supports this analysis, by demonstrating that no duty of preservation had been breached and that a proprietary claim should not have been available in that case. The simple conclusion is that claims to recover specific property and claims for unjust enrichment should be seen as mutually exclusive. KEYWORDS: trusts, third parties, proprietary claims, knowing receipt, res- titution, unjust enrichment, Re Diplock. I. INTRODUCTION According to orthodox trust principles, where property is transferred in breach of trust, a beneficiary can either bring a proprietary claim to recover the property or a personal claim against a knowing recipient of the trust property (hereinafter, the combination of these two claims will be referred to as the “equitable regime”). -
Dummy Asset Tracing
Dummy Asset Tracing Tatiana Cutts LSE Law, Society and Economy Working Papers 4/2018 London School of Economics and Political Science Law Department This paper can be downloaded without charge from LSE Law, Society and Economy Working Papers at: www.lse.ac.uk/collections/law/wps/wps.htm and the Social Sciences Research Network electronic library at: https://ssrn.com/abstract=3137285 © Tatiana Cutts. Users may download and/or print one copy to facilitate their private study or for non-commercial research. Users may not engage in further distribution of this material or use it for any profit-making activities or any other form of commercial gain. Electronic copy available at: https://ssrn.com/abstract=3137285 Dummy Asset Tracing Tatiana Cutts* Abstract: Tracing is widely understood to be the process of demonstrating that two rights are connected through an exchange, such that a claim to the right given up can be transmitted to the right acquired. This has been termed “exchange-product tracing”, and – though its core case is the unauthorised substitution of a trust right – it is also thought that a bank transfer exemplifies a rights-exchange. I argue here that this is a mistake: a bank transfer does not involve a substitution of the kind envisaged by exchange product tracing. Rather, the process that we have called “tracing money” through a bank transfer involves two steps: (i) converting bank money, by artifice, into an asset independent of the underlying account; (ii) following that asset from one location to another. Together, I call these steps “dummy asset tracing”. In this article, I show that the twin steps of dummy asset tracing have led us to increase the ambit of third party liability at law and in equity: by simulating cash transfers, innocent bank payees have been made liable to claimants with whom they did not transact, and of whom they were wholly unaware.