B's may be able to trace the value of their trust property into bank accounts and into assets which have been bought. Tracing is not strictly a remedy - it is a process which leads to the ultimate remedy. Detective work. .
TRACING AT COMMON LAW.
* Results in a personal claim against person holding, or who has held, the property that is being traced. .
* Only possible where P has received trust property and property exists in an identifiable form i.e. the trust property can be identified as the product or substitute for the original property. .
* Claim is not defeated by fact that property was no longer held. .
Examples (from Agip v Jackson).
a) Trustees use trust money to purchase £10,000 shares = clear transactional link = exchange product' = traceable.
b) Trustee puts money into 1 bank account which transfers it to another - money remains in an identifiable form = tracing permitted.
c) Transfer of trust money through telegraphic transfer = common law tracing fails - involves passing of electrons - not possible to identify £10,000 between the transfer.
d) P pays out money in anticipation of receiving it = delivery risk' - impossible to identify money - tracing not possible.
Defences to the Restitutionary Claim .
If defences are made out then property holder will not have to make full restitution. .
Lipkin Gorman v Karpnale - solicitor gambled firm's money at Playboy Club casino - Firm claimed club was liable as constructive trustee for knowing receipt of money. Held that club was entitled to pay a sum net of winnings which it had paid out - by paying winnings, the club had altered its position in good faith. 2 defences:.
1. Consideration provided for the money - could be a defence in an appropriate case - because a contract for gambling services could not be treated as legal consideration - so club unjustly enriched.
2. Change of position - casino had altered its finances in good faith by paying winnings to the solicitor.