The law of property task--tracing Essay Example | Topics and Well Written Essays - 2500 words

The law of property task--tracing - Essay Example What this means is that, in equity, the remedy of tracing awards a proprietary right in the property to the beneficiary, so that he may be given priority in recovering it in case the defendant goes bankrupt, provided his property still exists and is distinguishable from the bankrupt individual’s other assets. This proprietary nature of the right was affirmed in Foskett v McKeown (2000). Tracing at law is much more restrictive as compared to tracing in equity as the beneficiary is not allowed to claim title to any additions in the value of the property that it may have acquired since the breach of trust and recovering the property may be close to impossible if it was mixed with another. In equity, tracing can lead to the property even if it is mixed and recover it for the wronged beneficiary, which allots great power in the hands of those who have been deprived. Moreover, the differences between tracing at law and equity are considered by some commentators as separate remedies altogether instead of limbs of the same principle. It is imperative to consider both regimes, and my discussion would reflect both the common law remedy and the remedy in equity. Tracing at Law At common law, any individual with a legal title in property may be able to resort to tracing in order to recover it. Thus, this legal title, may be traced all the way to the newest form the property has taken after exchanging hands (for e.g where a defendant has bought a watch with the original property, cash). This phenomenon was described as a matter of hardnosed property rights and distinguished from an action in damages2, hence, any identifiable property was considered traceable and returned to the original beneficiary. Thus, the legal title is traced from one person to all successive individuals that came along the way until finally reaching the person against whom the action could proceed, providing a means to the remedy (Trustee of the property of FC Jones v Jones [1996]). In this way , it is regarded by the courts not as a remedy unto itself but as a means to a remedy, as seen in Banque Belge pour L'Etranger v. Hambrouck [1921]3. The first step then to a successful tracing action is to identify the defendant who is now in possession of the property. In the above case, where money was being traced, the defendant was identified as the fraudulent cashier who had deposited the money in a bank and used it to pay for his expenses. It was held that the cash even though it had the potential of being mixed with other funds, was identifiable in the account and could be recovered by Banque Belge. Once the defendant is identified, the next step is to proceed with a remedy which could be one of the following depending on the form of property being traced. If the property in question, as in the above case of Hambrouck, pertains to funds, then an action to recover ‘money had and received’ may be brought (Lipkin Gorman v Karpnale [1991])4. In Karpnale, a compulsive gambler come partner of a law firm was eventually caught drawing money for gambling purposes from the company account. The money was traced to the gambling club which had exchanged it with chips. The House of Lords found that the money, although received in good faith, was recoverable by the solicitors from the gambling club which was presently in possession of it. There was also a failure of consideration observed at the hands of the gambling club