[1914-15] All ER Rep 622 HEARING-DATES: 8, 9, 1
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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”). -
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. -
Sinclair V Brougham and Change of Position
313 Sinclair v Brougham and Change of Position Struan Scott* Introduction Sinclair v Brougham1 is a “bewildering authority”.2 Critics speak positively about aspects of it. Eoin O’Dell, for example, criticised their Lordships for elements of “legal madness”;3 yet he notes that they were judges of “exceptional ability”, “with an equitable eye to a just outcome”.4 Conversely, Lord Wright, who believed the case to be of “first-rate importance”, concedes concerns.5 These include the “rever[sion] to legal antiquarianism in order to explain” why the Birkbeck Building Society was not legally indebted for the ultra vires borrowing nor under a personal restitutionary liability to restore it.6 Turning to why some believe the case is important, to paraphrase Lord Wright, it shows that in some situations the law responds to “the retention [of an enrichment], not the receipt” of one.7 Since Westdeutsche Landesbank Girozentrale v Islington LBC (‘Westdeutsche’),8 Sinclair v Brougham has been regarded as overturned. This was the conclusion of the English Court of Appeal in Haugesund Kommune v Depfa Acs Bank (‘Haugesund’).9 Consistent with Birks’ suggestion, that the reasoning in Sinclair v Brougham was influenced by the “limited weapons” then available,10 particularly the lack of a change of position defence, the Haugesund Court confirmed not only the existence of a personal claim in unjust enrichment to recover ultra vires borrowing * Professor of Law, University of Otago. I presented some of the ideas underlying this paper at a Law of Obligations: Issues in Restitution Symposium held at the Faculty of Law, University of Otago in August 2016. -
Tracing and Common Law Claims to Substitute Assets: Separating Myth from Reality
Tracing and Common Law Claims to Substitute Assets: Separating Myth From Reality Jonathan Silver Submitted in accordance with the requirements for the degree of Doctor of Philosophy De Montfort University Faculty of Business and Law, United Kingdom Supervisors Mr Tim Hillier Dr Tatiana Cutts March 2018 I confirm that the work submitted is my own. I further confirm that appropriate credit has been given within the thesis where reference has been made to the work of others. 1 Abstract Tracing is a process by which a claimant shows that an asset represents a substitute for an original asset for the purposes of making a claim in respect of that substitute. Orthodox tracing theory says that this process involves the following of the value inherent in the original into the substitute. Orthodox theory also states that tracing is a neutral process, unconnected to any claims that may be made in the substitute. The effect of accepting this orthodoxy has been that the true nature of the tracing process has become obscured. In particular the failure of orthodox theorists to correctly identify tracing as being an exercise that can only be justified within the context of a fiduciary relationship has led to the widespread belief that it is possible to trace at common law. It will be argued in this thesis that this cannot be the case because the common law allows no claims with respect to substitute assets, and this makes the tracing exercise redundant. The notion that it is possible to trace at common law is contrary to properly understood authority and has no normative foundations. -
Is the Thief a Trustee?
Is the Thief a Trustee? Principled Approaches to Proprietary Restitutionary Remedies William Michael Cheyne A dissertation submitted in partial fulfilment of the degree of Bachelor of Laws (with Honours) at the University of Otago October 2012 Acknowledgements I would like to thank: Professor Struan Scott for his thorough supervision, guidance and advice this year; Professor Stuart Anderson and Jessica Palmer for their helpful comments at my seminar; Dad, Kim and Jess for their careful proofreading; My family for their constant support and encouragement; Finally Miriam for her love. 1 Contents Acknowledgements .................................................................................................................... 1 Contents ..................................................................................................................................... 2 Chapter I: Introduction ............................................................................................................... 4 Chapter II: Theories of Trust ..................................................................................................... 6 A What are the Consequences of Finding a Trust? ................................................................ 7 1. Proprietary rights only ................................................................................................... 7 2. Personal rights in addition to proprietary rights ............................................................ 9 B What Gives Rise to a Trust? ............................................................................................ -
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THE REMEDIAL RESTITUTIONARY PROPRIETARY REMEDY: AN EVALUATION OF THE EXTENT TO WHICH PREFERENTIAL RECOVERY SHOULD BE AVAILABLE FOR THE RECOVERY OF MONEY S R Scott, LL.M. (Otago)* Senior Lecturer in Law, University of Otago I. PRELIMINARY:THE RECOGNITION OF THE REMEDIAL RESTITUTIONARY PROPRIETARYREMEDY Some 30 years ago Goff and Jones challenged orthodox legal thinking by suggesting, "that equitable proprietary rights may be granted to prevent unjust enrichment."' They argued that "[elach case should be considered on its merits to decide whether the claimant should have the additional benefits which proprietary rights aff~rd."~In Re Goldcorp Exchange Ltd (In R~c)~the Privy Council, adopting the formulation advanced in GofSand Jones, The Law of Restitution: accepted that the courts can create a remedial restitutionary proprietary right, pursuant to which a plaintiff, is "deemed to have retained equitable title" to money in a defendant's posse~sion.~ This remedy is all about the conferment of preferential treatment upon a plaintiff. As such it raises two issues. The first issue is, in what circumstances should the courts be willing to deem that the plaintiff has retained equitable title. The second issue is, the nature or extent of this preferential treatment. Assume that acting under the influence of a mistake you pay me the sum of $1,000.00 twice. Unaware of your mistake, I use the second and mistaken payment to purchase a painting of an unknown painter. That painter sub- sequently becomes fashionable and the painting is now worth $10,000.00. Chase Manhattan Bank NA v Israel-British Bank (London) Ltd suggests that preferential recovery may be available. -
Losing the Fiduciary Requirement for Equitable Tracing Claims
Losing the fiduciary requirement for equitable tracing claims Andreas Televantos* I. Introduction Mr Matthew Newcomen was a clergyman who died in 1669. At his funeral he was described as “a solid, pain- ful, pathetic, and perswaisive preacher”. While nobody today would want to be called a “painful and pathetic” speaker, to Newcomen it would have been high praise. “Pathetic’, from the Greek πάθος which means hap- pening, experience, or suffering, meant of deep feeling in the seventeenth century. Likewise, “painful” had a meaning closer to “painstaking” in modern English. This anecdote shows that vocabulary can stay the same over hundreds of years, even as its meaning changes. This is certainly true of the language of the law. After all, lawyers were using the term “negligence” long before the emergence of “negligence” as a distinct tort. Likewise, the term “consideration” has shifted from a descrip- tion of the reason that a contract was entered into, into a narrow technical requirement. The term “trust” too has shifted from a reference to “trusting” into a distinct institution for the holding of property. Difficulties, however, can arise when lawyers presume that usage of legal terms has remained consistent. An example of one such difficulty is the “fiduciary requirement” for claiming assets traced in equity. In outline, the rule provides that only a principal in a fiduciary relationship, or one with an equitable property right, can assert title to assets traced in equity, and so assert title to assets traced through either clean substitutions and/or a mixed fund. Put the other way, the legal owner of property, unless he has been owed fiduciary duties, cannot assert a proprietary claim to the proceeds of his property if at any stage the property or its proceeds were mixed with property belonging to another. -
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Volume 14(2) Equity, Restitution and the Proprietary Recovery ofValue 247 EQUITY, RESTITUTION AND THE PROPRIETARY RECOVERY OF VALUE JOHN GLOVER* I. INTRODUCTION The language of property in the private law is increasingly used to phrase remedies for the recovery of value. Where value is the subject of a claim and the courts express judgement property terms, they are enabled to confer the increased measures of recovery which proprietary remedies allow. But it may be at the expense of authenticity in the traditional concept of property. Can the old rules for the granting of proprietary relief expand to accommodate the new sense of property? Or must resort be had to some result-driven rationale to justify what is now occurring, such as unjust enrichment? Perhaps it ought be acknowledged that in determining the proprietary consequences of an entitlement to value, the courts are really exercising a discretion. Proprietary recovery of value refers to a certain measure of recovery of non specific interests in property, usually money. It does not refer to the recovery of any property in specie and is not the enforcement of title to, or rights over, any particular thing or monetary denomination. In all cases it is obtained through the exercise of equitable rather than common law rights. * BA (Hons), LLB (Hons) (Melb), BCL (Oxon), Lecturer, Monash University, Faculty of Law. 248 UNSW Law Journal 1991 Chase Manhattan Bank NA v Israel-British Bank (London) Ltd1 is an example of the proprietary recovery of value. The plaintiff was a New York Bank which mistakenly paid some $US 2 million to a second bank in New York, for the credit of the defendant bank, which carried on business in London.