LAW5003 Equity & Trusts Student ID 180177042
Module: LAW5003 EQUITY AND TRUSTS
Date: 01/06/2020
Student ID: 180177042
DECLARATION
I confirm that during the allocated writing period for the 24-hour online assessment, I
have had no inappropriate conversation about this assessment with any persons.
Further, I certify that the submitted work represents my thinking and my organisation
of material in response to the questions posed. The sources for the information,
concepts, and phrases used are attributed. I am aware of the serious consequences
that result from improper discussions with others or from the improper citation of
work that is not my own.
1
, LAW5003 Equity & Trusts Student ID 180177042
Question 5:
The parties [Hilda and the law students] will be advised as what proprietary remedies may be
available to them. The process of tracing will be used to demonstrate to the parties that their
original money has now turned into substitute pieces of property.
Captain Beefheart Album
Hilda v Dan
Dan is the legal owner of the album. Thus, Hilda has to make a claim in equity. A fiduciary
relationship can be found as it does not need to exist before the transfer of the property, it can
be created by the transfer itself. According to the obiter ‘thief’ example given by Lord
Browne-Wilkinson in Westdeutsche v Islington, Hilda is now able to trace into property
which Dan has acquired. The burden is on Hilda to show that the album is the proceeds of her
money and Dan holds the album on constructive trust.
Dan will make a very strong argument from the beginning, that Hilda cannot trace the album
because he paid the money into a debt. One cannot trace into a debt (black-hole), Roscoe v
Winder. Nevertheless, Hilda has a potential argument by using the doctrine of ‘backwards
tracing’. Firstly, the debt was incurred by the purchase of the album just a month before the
misappropriation took place, this is a short time period. Secondly, the purchase of the album
and the amount of misappropriated money transferred to pay off the debt is exactly the same,
£20,000. This coincidence can conclude that they are “transactionally linked” Relfo v
Varsani, reaffirmed in Brazil v Durant. As per Dillon LJ in Bishopsgate v Homan such a
transactional link represents an intention, which is on behalf of Dan to use the
misappropriated money to pay off the album/debt.
However, Dan can counterargue this point by reiterating Leggatt LJ’s disapproval in
Bishopsgate, that backwards tracing is a ‘bad idea’ as there cannot be an equitable remedy
against an asset acquired before misappropriation took place. These are “hard-nosed property
right” as per Lord Browne-Wilkinson in Foskett v McKeown. Also, one needs to be careful
that innocent third parties [creditors] are not harmed. This disapproval was supported in
Moriarty in the Court of Appeal. However, Hilda can distinguish between this case and hers’
as Moriarty involved tons of creditors, whereas here there is only Hilda. Also, that she gave
money to Dan in September, so the money arrived before he bought the album, despite him
not noticing. Hilda could also argue that in practice equity looks to justice of the case. Lord
Hope in that case stated that equity decides on what is fair, just and reasonable. Hence, it is
fair, just and reasonable to allow Hilda to claim the album, as in equity “everything is
presumed against the wrongdoer” Re Hallett. As it has appreciated in value [£30,000], Hilda
can choose whether to take the album or have an equitable charge on the album.
2
Module: LAW5003 EQUITY AND TRUSTS
Date: 01/06/2020
Student ID: 180177042
DECLARATION
I confirm that during the allocated writing period for the 24-hour online assessment, I
have had no inappropriate conversation about this assessment with any persons.
Further, I certify that the submitted work represents my thinking and my organisation
of material in response to the questions posed. The sources for the information,
concepts, and phrases used are attributed. I am aware of the serious consequences
that result from improper discussions with others or from the improper citation of
work that is not my own.
1
, LAW5003 Equity & Trusts Student ID 180177042
Question 5:
The parties [Hilda and the law students] will be advised as what proprietary remedies may be
available to them. The process of tracing will be used to demonstrate to the parties that their
original money has now turned into substitute pieces of property.
Captain Beefheart Album
Hilda v Dan
Dan is the legal owner of the album. Thus, Hilda has to make a claim in equity. A fiduciary
relationship can be found as it does not need to exist before the transfer of the property, it can
be created by the transfer itself. According to the obiter ‘thief’ example given by Lord
Browne-Wilkinson in Westdeutsche v Islington, Hilda is now able to trace into property
which Dan has acquired. The burden is on Hilda to show that the album is the proceeds of her
money and Dan holds the album on constructive trust.
Dan will make a very strong argument from the beginning, that Hilda cannot trace the album
because he paid the money into a debt. One cannot trace into a debt (black-hole), Roscoe v
Winder. Nevertheless, Hilda has a potential argument by using the doctrine of ‘backwards
tracing’. Firstly, the debt was incurred by the purchase of the album just a month before the
misappropriation took place, this is a short time period. Secondly, the purchase of the album
and the amount of misappropriated money transferred to pay off the debt is exactly the same,
£20,000. This coincidence can conclude that they are “transactionally linked” Relfo v
Varsani, reaffirmed in Brazil v Durant. As per Dillon LJ in Bishopsgate v Homan such a
transactional link represents an intention, which is on behalf of Dan to use the
misappropriated money to pay off the album/debt.
However, Dan can counterargue this point by reiterating Leggatt LJ’s disapproval in
Bishopsgate, that backwards tracing is a ‘bad idea’ as there cannot be an equitable remedy
against an asset acquired before misappropriation took place. These are “hard-nosed property
right” as per Lord Browne-Wilkinson in Foskett v McKeown. Also, one needs to be careful
that innocent third parties [creditors] are not harmed. This disapproval was supported in
Moriarty in the Court of Appeal. However, Hilda can distinguish between this case and hers’
as Moriarty involved tons of creditors, whereas here there is only Hilda. Also, that she gave
money to Dan in September, so the money arrived before he bought the album, despite him
not noticing. Hilda could also argue that in practice equity looks to justice of the case. Lord
Hope in that case stated that equity decides on what is fair, just and reasonable. Hence, it is
fair, just and reasonable to allow Hilda to claim the album, as in equity “everything is
presumed against the wrongdoer” Re Hallett. As it has appreciated in value [£30,000], Hilda
can choose whether to take the album or have an equitable charge on the album.
2
