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20 - Tracing

Judith Bray
Affiliation:
University of Buckingham
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Summary

Key points

  • tracing is neither a claim nor a remedy but a process;

  • tracing is a proprietary claim and gives the claimant priority over creditors in bankruptcy and also allows any increases in value to be claimed;

  • tracing allows the claimant to claim a substitute asset for his own;

  • tracing should be distinguished from following which allows the claimant to recover his asset as it moves through the hands of different people;

  • tracing at common law is based on legal ownership of property;

  • tracing at common law ceases where funds become mixed unless the asset can be separated from the whole;

  • tracing in equity allows tracing into mixed funds;

  • in order to trace in equity the claimant must prove a fiduciary relationship and an equitable interest in the property;

  • where a trustee mixes trust funds with his own funds in a bank account the rules always presume that the trustee withdraws his own funds first;

  • where funds in a bank account of a trustee are dissipated a beneficiary can claim against any asset purchased by the trustee with the funds;

  • where funds of two innocent volunteers are mixed the court traditionally could choose either to apply Clayton’s Case or distribute the funds pari passu, which is today the preferred method; and

  • the right to trace ceases when the assets have been dissipated or when the property is in the hands of a bona fide purchaser for value or when it is inequitable to trace.

Introduction: what is tracing?

Tracing is a process or mechanism which involves the owner of property identifying an asset in the hands of a third party. Tracing is not a remedy nor is it a claim.

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Publisher: Cambridge University Press
Print publication year: 2012

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  • Tracing
  • Judith Bray, University of Buckingham
  • Book: A Student's Guide to Equity and Trusts
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511979057.021
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  • Tracing
  • Judith Bray, University of Buckingham
  • Book: A Student's Guide to Equity and Trusts
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511979057.021
Available formats
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Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Tracing
  • Judith Bray, University of Buckingham
  • Book: A Student's Guide to Equity and Trusts
  • Online publication: 05 June 2012
  • Chapter DOI: https://doi.org/10.1017/CBO9780511979057.021
Available formats
×