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The Transformation of Equitable Tracing

Lookup NU author(s): Dr Derek Whayman

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Abstract

Trust and fiduciary law, nowadays, describes and justifies tracing better that seeing it as a process supporting a property claim. Breach of trust justifies priority over creditors, and breach of fiduciary duty justifies taking any increase in value. This split is impossible if the claim is seen as one of property. The law of tracing grew alongside trust and fiduciary law. Trust and fiduciary law were settled into strict rules, and at the same time tracing grew to take in more and more circumstances. Equitable interests came to be seen as a right or property, and so did tracing. The latter viewpoint is the conventional one in England: Foskett v McKeown [2001] 1 AC 102 (HL); this is perhaps also the case in Australia: Evans v European Bank Ltd [2004] NSWCA 82. I argue that this arose because of the lumping together of different facets of trust and fiduciary law into ill-defined but harsh ‘trustees’ duties’ in the nineteenth century. This made tracing look like a a process supporting a property claim. However, by the 1990s trust and fiduciary law was splitting; in England see Bristol & West BS v Mothew [1998] Ch 1 (CA) and in Australia see Breen v Williams (1996) 186 CLR 71 (HCA). I argue trust and fiduciary law is now a better fit for tracing and yields fairer, more balanced, results in line with the objectives of modern equity. Some new case law supports this proposition. I also make a coherence argument. The rules cohere around a central idea. Once that idea changes, they are slowly changed to cohere around the new central idea. That is happening now. This paper’s doctrinal aspect demonstrates how some the questions from the first principles analyses in, e.g., Bant & Bryan (2016) 6 J Eq 181 can be answered in the context of trust law. Its coherence argument will assist those wishing to counter the criticism in the literature that the new cases lack precedent and stray too far into obiter dicta discussing general principles.


Publication metadata

Author(s): Whayman D

Publication type: Conference Proceedings (inc. Abstract)

Publication status: Unpublished

Conference Name: Staff Seminar

Year of Conference: 2019


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