Proprietary Claims and Remedies
Can a proprietary claim only be made for the original property? - ANSWER No - can also
make a proprietary claim for any substitute property that represents the value of the original
Do claimants always get a choice as to remedy? - ANSWER No - sometimes do and
sometimes don't
Do following and tracing tell us anything about the rights to that property? - ANSWER No
Does being able to follow the original property, or trace its value into substitute property, mean we
have a claim? - ANSWER NO - merely evidential processes
However, what did Lord Toulson accept in Brazil v Durant? - ANSWER That 'there may be
cases where there is a close causal and transactional link between the incurring of a debt and the use
of trust funds to discharge it'
If a third party has the property claimed for, what type of trust will the property be held on? -
ANSWER Constructive trust
If the defendant fails to pay an equitable charge, what does the claimant have? -
ANSWER The right to obtain an order for sale of the property
If the whole trust is held on trust for the claimant, what can the claimant then do? -
ANSWER Ask for the property to be transferred to them
If the wrongdoing express trust has the property claimed for, what type of trust will the property be
held on? - ANSWER Express trust
If you can make a proprietary claim, what type of remedy can you seek? - ANSWER Can
seek a personal or a proprietary remedy
In the case of wrongdoing contributors to a mixed substitution, what will the claimant get to do? -
ANSWER Choose their remedy
In this context, who is the claimant? - ANSWER The person making the claim - reference to
the beneficiary
In this context, who is the defendant? - ANSWER The person we are making a claim against
- often the trustee
In this context, who is the fiduciary? - ANSWER Trustee
In what circumstances may an equitable charge be more beneficial than a trust? -
ANSWER Where the property has decreased in value
Is an equitable charge always available as a remedy? - ANSWER No - may be dependent on
the circumstances
To determine whether property is held on express or constructive trust, what must we look at? -
ANSWER The identity of the defendant
To the extent that the wrongdoer can't distinguish between her assets and the claimant's assets,
what will happen to the money? - ANSWER The money will be treated as belonging to the
beneficiary
, Proprietary Claims and Remedies
What are claims relating to the original trust property based on? - ANSWER The
beneficiary's continuing equitable proprietary interest in the original trust property - vindication of
property rights
What are following and tracing? - ANSWER Merely evidential processes to establish
whether the claimant/beneficiary can make a claim
What are the 3 potential remedies? - ANSWER 1. Proprietary remedy of a trust
2. Proprietary remedy of an equitable charge
3. Personal remedy
What are the only two situations in which the rule in Clayton's case will apply? - ANSWER 1.
Only applies to current accounts
2. Only applies where all contributors to the account are innocent
What are the tracing rules for cases of mixed substitutions dependent on? - ANSWER The
identity of the other contributor - innocent or wrongdoer
What are the two options claimants have if trust money is paid into a bank account? -
ANSWER 1. To follow the money into the hands of the bank
2. To trace into the debt owed by the bank to the account holder (trustee)
What are the two options for beneficiaries when a trust goes wrong? - ANSWER 1. Personal
claims
2. Proprietary claims
What are the two processes by which we can identify who has the property? -
ANSWER Following and tracing
What are the two requirements for the bona fide purchaser defence? - ANSWER 1. Giving
value
2. Acting in good faith
What are two limitations of personal claims in this context? - ANSWER 1. Do not give
priority over creditors on insolvency
2. Where misappropriated property is unique or sentimental, will not give the beneficiary what they
want
What are two limitations of proprietary claims based on following? - ANSWER 1. Cannot
follow where original property has been destroyed or dissipated
2. Cannot follow where property has lost its identity due to being mixed with other property
What did Lord Toulson give as the reason for his rejection of backwards tracing in all circumstances? -
ANSWER Policy reasons - protection of unsecured creditors and concerns as to the knock-
on effect
Can a proprietary claim only be made for the original property? - ANSWER No - can also
make a proprietary claim for any substitute property that represents the value of the original
Do claimants always get a choice as to remedy? - ANSWER No - sometimes do and
sometimes don't
Do following and tracing tell us anything about the rights to that property? - ANSWER No
Does being able to follow the original property, or trace its value into substitute property, mean we
have a claim? - ANSWER NO - merely evidential processes
However, what did Lord Toulson accept in Brazil v Durant? - ANSWER That 'there may be
cases where there is a close causal and transactional link between the incurring of a debt and the use
of trust funds to discharge it'
If a third party has the property claimed for, what type of trust will the property be held on? -
ANSWER Constructive trust
If the defendant fails to pay an equitable charge, what does the claimant have? -
ANSWER The right to obtain an order for sale of the property
If the whole trust is held on trust for the claimant, what can the claimant then do? -
ANSWER Ask for the property to be transferred to them
If the wrongdoing express trust has the property claimed for, what type of trust will the property be
held on? - ANSWER Express trust
If you can make a proprietary claim, what type of remedy can you seek? - ANSWER Can
seek a personal or a proprietary remedy
In the case of wrongdoing contributors to a mixed substitution, what will the claimant get to do? -
ANSWER Choose their remedy
In this context, who is the claimant? - ANSWER The person making the claim - reference to
the beneficiary
In this context, who is the defendant? - ANSWER The person we are making a claim against
- often the trustee
In this context, who is the fiduciary? - ANSWER Trustee
In what circumstances may an equitable charge be more beneficial than a trust? -
ANSWER Where the property has decreased in value
Is an equitable charge always available as a remedy? - ANSWER No - may be dependent on
the circumstances
To determine whether property is held on express or constructive trust, what must we look at? -
ANSWER The identity of the defendant
To the extent that the wrongdoer can't distinguish between her assets and the claimant's assets,
what will happen to the money? - ANSWER The money will be treated as belonging to the
beneficiary
, Proprietary Claims and Remedies
What are claims relating to the original trust property based on? - ANSWER The
beneficiary's continuing equitable proprietary interest in the original trust property - vindication of
property rights
What are following and tracing? - ANSWER Merely evidential processes to establish
whether the claimant/beneficiary can make a claim
What are the 3 potential remedies? - ANSWER 1. Proprietary remedy of a trust
2. Proprietary remedy of an equitable charge
3. Personal remedy
What are the only two situations in which the rule in Clayton's case will apply? - ANSWER 1.
Only applies to current accounts
2. Only applies where all contributors to the account are innocent
What are the tracing rules for cases of mixed substitutions dependent on? - ANSWER The
identity of the other contributor - innocent or wrongdoer
What are the two options claimants have if trust money is paid into a bank account? -
ANSWER 1. To follow the money into the hands of the bank
2. To trace into the debt owed by the bank to the account holder (trustee)
What are the two options for beneficiaries when a trust goes wrong? - ANSWER 1. Personal
claims
2. Proprietary claims
What are the two processes by which we can identify who has the property? -
ANSWER Following and tracing
What are the two requirements for the bona fide purchaser defence? - ANSWER 1. Giving
value
2. Acting in good faith
What are two limitations of personal claims in this context? - ANSWER 1. Do not give
priority over creditors on insolvency
2. Where misappropriated property is unique or sentimental, will not give the beneficiary what they
want
What are two limitations of proprietary claims based on following? - ANSWER 1. Cannot
follow where original property has been destroyed or dissipated
2. Cannot follow where property has lost its identity due to being mixed with other property
What did Lord Toulson give as the reason for his rejection of backwards tracing in all circumstances? -
ANSWER Policy reasons - protection of unsecured creditors and concerns as to the knock-
on effect
